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You can start collecting Social Security at the age of 62, but the longer you wait the more money you’ll receive.
If you claim your benefits at the full retirement age of 67, you will receive $1,500 per month.
If you were to claim your benefits at age 62, it would be cut by 30%, making your monthly check $1,050.
Now, if you can wait until the age of 70, you would receive your full benefit amount of $1,500, plus a 24% bonus each month, totaling $1,860 a month.
Waiting to receive Social Security at the age of 70, instead of 62 will give you $810 more a month.
No : Look Into Survivor And Disability Benefits
You may be able to get more money from Social Security than you thought â if you’ve been widowed or are disabled or related closely to someone disabled. That’s because Social Security offers survivor and disability benefits â and even retirement benefits for dependents of retirees in some cases. If your spouse passes away, you may be able to claim survivor benefits â and your children may receive them, too, through age 17. Social Security offers disability benefits, also, to people of all ages who qualify.
Trends In Claiming Social Security
Early Social Security benefit claims jumped during the 2008 recession. But since then, the trend has shifted decisively toward later claiming.
Note: The sudden jump in claims in 2009 by those aged 66 is attributable to a change in full retirement age to 66 from 65 for those born between 1943 and 1954.
That positive trend now seems likely to stall or even reverse, Mr. Johnson said.
A lot of older people losing jobs now are going to be unemployed for a long time, and my fear is that many of them are never going to work again, he said. Theyre going to end up taking Social Security and dipping into their retirement accounts earlier than expected, and that is going to have serious consequences for their economic security at age 70 and 80.
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Max Out Earnings Through Full Retirement Age
The SSA calculates your benefit amount based on your earnings, so the more you earn, the higher your benefit amount will be. Some pre-retirees look for ways to increase their income, such as taking on part-time work or generating business income. Others, however, unaware of the impact on benefits, may scale back on their work or semi-retire, which can lower their Social Security income.
“Money earned after age 60 isn’t indexed, which means that income-earning in your 60s can replace a year in which there was a zero or a year in which you had lower earnings,” says Marguerita Cheng, CFP®, CRPC®, RICP, CDFA, CEO of Blue Ocean Global Wealth, Gaithersburg, MD.
Earnings above the annual cap$142,800 in 2021 and indexed to inflation each yearare left out of the calculation. Your goal should be to maximize your peak earning years, striving to earn at or above the cap.
Think Of Social Security As An Annuity
“Given todays longevity, it is more important than ever to maximize your Social Security benefit. Think of this as an annuity for your lifetime,” says Charlotte A. Dougherty, CFP®, founder of Dougherty & Associates, Cincinnati, OH.
“Social Security is the only 8% guaranteed investment around. Not only that, it is backed by the federal government,” says David Hunter, CFP®, Horizons Wealth Management, Inc., Asheville, NC.
Although there are many planning options for maximizing Social Security benefits, they can be complex and only apply in certain circumstances. The following five planning tips are ones that everyone should know about in order to increase the size of their Social Security checks.
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No : Work For At Least 35 Years
Many people don’t realize this, but the formula that the SSA uses to compute your benefits is based on your earnings in the 35 years in which you earned the most, adjusted for inflation. If you only earned income in 30 years, the formula will be incorporating five zeros, which will shrink your benefits. Aim to work for at least 35 years, if you can.
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Here’s How You Can Receive A Much Larger Payout From Social Security
The chances are good that, when you retire, you’re going to be reliant on Social Security income to make ends meet. Data from the Social Security Administration finds that 62% of current retired workers generate at least half of their income from the program. Meanwhile, national pollster Gallup surveyed nonretirees earlier this year and found that a record 88% expect Social Security to be a major or minor source of income during retirement.
This growing reliance on Social Security demonstrates how important it is for future generations of retired workers to maximize what they’ll receive from the program. While some benefit-boosting catalysts, such as the annual cost-of-living adjustment or congressional action, are beyond our control, there are five smart and effective ways workers can increase their Social Security benefits.
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Be Tactical With Spousal Benefits
Getting married may add a wrinkle to your Social Security strategy. Spouses that were married for at least 10 years are eligible to claim not only their own benefits, but spousal benefits too. And thats no small matter. Claiming spousal benefits means reaping 50% of your current or former partners annual payout.
To make the most of these payments, first determine which spouse will earn a larger benefit. The lower-earning spouse can start claiming Social Security at an earlier age, while the higher-earning spouses benefit amount continues to grow. Once the higher-earning spouse reaches 70, the couple can switch to filing against that persons earnings history.
How To Boost Your Social Security Benefits By $370 A Month
- Alice Grahns, Senior Digital Consumer Reporter
- 8:26 ET, Aug 6 2021
PENSION savers can boost their future social security benefits by $370 a month by delaying their claim.
The simple method would hike your benefits by around $4,440 a year, and is handy if social security will be your only or main income in retirement.
Social security benefits make up 33% of the average retiree’s income, according to the Social Security Administration .
To get the $370 boost, it assumes that you’re on track to get the 2021 average benefit of $1,543 a month.
This is $2,352 less than the maximum available of $3,895 this year.
To receive the full amount, you’ll need to work at least 35 years, boost your earnings and wait until your full retirement age to begin claiming.
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Your Monthly Social Security Benefits Increase The Longer You Wait To Claim
You can collect Social Security benefits as soon as you turn 62, but taking benefits before your full retirement age means a permanent reduction in your payments of as much as 25% to 30%, depending on your full retirement age.
If you wait until you hit full retirement age to claim Social Security benefits, youll receive 100% of your earned benefits. But you can also get a big bonus by waiting to claim your Social Security benefits at age 70 your monthly Social Security benefit will grow by 8% a year until then. Any cost-of-living adjustments will be included, too, so you don’t forgo those by waiting.
Waiting to claim your Social Security benefits can help your heirs as well. By waiting to take her benefit, a high-earning wife, for example, can ensure that her low-earning husband will receive a much higher survivor benefit in the event she dies before him. That extra income of up to 32% could make a big difference.
Ways To Increase Social Security Benefits
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Knowing how to increase Social Security benefits is important, since those checks will likely be a major source of your income in retirement.
Unfortunately, many people dont understand how Social Security really works. They claim too early, miss out on important benefits and fail to use strategies that could boost their lifetime income. Their mistakes can cost them as much as $250,000, researchers have estimated.
Here are eight ways to increase your Social Security benefits.
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Choose Your Filing Age Wisely
The monthly Social Security benefit you’re entitled to during retirement will hinge on your lifetime earnings — specifically, your inflated-adjusted wages during your 35 highest-paid years in the workforce. But your filing age will determine your monthly benefit as well.
If you sign up for Social Security at full retirement age, or FRA, you’ll get the exact monthly benefit your earnings history renders you eligible for. FRA kicks in at age 67 for anyone born in 1960 or later.
However, you’re allowed to delay your filing past FRA. For each year you do, your benefit gets to grow 8%.
Once you turn 70, your benefit can no longer get boosted, so that’s generally considered the latest age to sign up for Social Security. But if your FRA is 67 and you hold off on filing until age 70, you’ll lock in a monthly benefit that’s 24% higher — for life.
Claim Spousal Benefits And Delay Yours
If you and your spouse were born before Jan. 2, 1954, and have both reached full retirement age, you can claim spousal benefits and let your own benefits keep growing. Then, when you reach age 70, you can switch to your higher benefit.
One caution: You can’t have claimed your own benefit if you want to make use of this “restricted application,” as it’s called.
In order to claim a spousal benefit, your spouse must have filed for their own Social Security benefits .
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Work Until Full Retirement Age
Another step you can take to maximize your Social Security benefits is to work until your full retirement age . Originally, this number was set at 65. But it has been steadily creeping up, thanks to the passage of the Social Security Amendments of 1983 . Starting in 2000, the full retirement age has been increasing in two-month increments so that its 67 for people born in 1960 or later.
If you dont wait till your FRA, the earliest you can start receiving Social Security is 62 years old. However, your benefit will be reduced by up to 30% if your FRA is 67 in this case.
Apply For Social Security Survivor Benefits
You may also be able to increase your monthly retirement paycheck using Social Security survivor benefits.
If youre widowed and your deceased spouses benefit was higher than your retirement benefit, you are generally able to claim the higher of the two, says Brotman.
Experts recommend higher-earning spouses wait as long as possible to claim benefits, since it can prepare a lower-earning spouse for a bigger benefit as a widow or widower. Unlike spousal benefits, which are based on the unadjusted PIA and when the nonworking spouse chooses to start benefits, survivor benefits are determined by the amount the earning spouse actually received if they die after starting benefits.
When a couple is collecting benefits and one spouse dies, the surviving spouse typically receives the higher of the two benefit payments moving forwardbut not both, says Brotman. That means youll want to consider age disparity, life expectancy, the health of each spouse and the benefit amounts available for each spouse to try to maximize your benefits, both while youre both living and when one of you is widowed.
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Apply For Survivor Benefits
If your deceased spouse was eligible for a higher Social Security payment than you are, you might be eligible for that higher survivor benefit. You might qualify for the higher benefit even if your spouse died before applying for benefits.
If you begin to collect Social Security benefits before you reach normal retirement age, not only will you receive a reduced benefit, but after your death, your surviving spouse will, too.
I Dont Have Anything Saved What Should I Do
Your options are limited here, but there are moves that may get some Social Security income flowing now while preserving the possibility of higher benefits later.
One strategy is to claim benefits now but suspend them later to accumulate what are known as delayed retirement credits. Lets say our out-of-work 62-year-old claimant finds a new job at 64. When she reaches her full retirement age, she could suspend her benefits and begin accruing delayed credits, calculated from her already reduced benefit. Doing so would add roughly $50,000 to her lifetime benefit, Mr. Meyer said. And if she waits until 63 to make her initial filing and then executes this suspend strategy, the addition to her likely lifetime payout will rise to about $71,000.
You can only suspend once, but it does add an element of flexibility that can result in more cumulative benefits, Mr. Meyer said.
People who gain new employment while receiving Social Security should be aware of one complication here. Its called the retirement earnings test.
If you claim benefits before your full retirement age and keep working, Social Security withholds a portion of your benefits if your earnings exceed certain amounts, a figure known as the exempt amount.
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Fact #: Social Security Provides A Foundation Of Retirement Protection For Nearly Every American And Its Benefits Are Not Means
97% of the elderly either receive Social Security or will receive it.
Almost all workers participate in Social Security by making payroll tax contributions, and almost all elderly Americans receive Social Security benefits. In fact, 97 percent of the elderly either receive Social Security or will receive it, according to Social Security Administration estimates. The near-universality of Social Security brings many important advantages.
Social Security provides a foundation of retirement protection for people at all earnings levels. It encourages private pensions and personal saving because it isnt means-tested in other words, it doesnt reduce or deny benefits to people whose income or assets exceed a certain level. Social Security provides a higher annual payout than private retirement annuities per dollar contributed because its risk pool is not limited to those who expect to live a long time, no funds leak out in lump-sum payments or bequests, and its administrative costs are much lower.
Indeed, universal participation and the absence of means-testing make Social Security very efficient to administer. Administrative costs amount to only 0.6 percent of annual benefits, far below the percentages for private retirement annuities. Means-testing Social Security would impose significant reporting and processing burdens on both recipients and administrators, undercutting many of those advantages while yielding little savings.
Work For Longer Than 35 Years
The second factor that the SSA considers when calculating your Social Security benefit is your length of work history. The SSA averages your 35 highest-earning years when calculating your monthly payout, which on the surface means you should work at least 35 years if you don’t want $0’s averaged in for each year less of 35 that you worked.
But it’s generally not a bad idea to consider working well beyond 35 years. Chances are you lacked the skill set necessary to garner a high wage in your teens or early 20s. By your 60s you’ll likely have plenty of work experience, which could translate to a higher annual wage even after adjusting for inflation and lift your overall earning average over your 35 highest-earning years.
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When Would The Extra Money Appear In My Social Security Check
The COLA goes into effect with December benefits, which are paid in January 2023.
Social Security payments are made on Wednesdays, following a rollout schedule based on the beneficiary’s birth date: If you were born from the 1st through the 10th of the month, your benefits are paid on the second Wednesday of the month and any increase will appear in your Jan. 11 check.
If your birthday falls between the 11th and 20th of the month, your checks are paid on the third Wednesday, and you’ll see your first COLA increase on your Jan. 18 check.
Those born between the 21st and the end of the month receive benefits on the fourth Wednesday, which, in 2023, is Jan. 25.