Social Security is a crucial income source for most people aged 65 and over. However, the average monthly benefit payment of $1,710.78 (per the Social Security Administration as of November 2023) may not be enough to cover rising living costs. Below are some things you can do to get the most out of your benefits.
1. Work at Least 35 Years
Social Security retirement benefits are available to anyone who has been employed for at least 10 years. The Social Security Administration (SSA) calculates benefits based on your 35 highest-earning years.
Be careful, as working fewer than 35 years will result in zeros being a part of your calculation.
2. Extend Your Career
If you are able, delay claiming your benefits as continuing to work after your earnings peak helps to determine benefits. Waiting for the full retirement age will increase your monthly check.
The SSA has a helpful chart on its website to show the benefit reduction if you were to retire at age 62 instead of the full retirement age. For example, the full retirement age for anyone born in 1960 or later is 67 and opting to retire prior to that age would reduce benefits by 30%.
3. Ensure an Accurate Earnings Record
Be proactive and ensure your information is correct. Regularly review your earnings record with the SSA and report any discrepancies promptly to avoid affecting your benefit amount.
4. File for Benefits at the Right Time
We already mentioned the impact of not waiting for your full retirement age before filing for benefits, but you can increase things even further by working past your retirement age. Retirement benefits are increased by a certain percentage for each month you delay, stopping at age 70.
For someone born in 1960 or later, delaying until age 70 will result in an estimated 124% of the monthly benefit. You can get the percentage for your year of birth at SSA.gov.
Don’t forget that even if you choose to delay the start of your benefit collection, you can and should still sign up for Medicare at the age of 65. Medical insurance costs could increase if you delay applying for it.
5. Consider Your Spouse’s Benefit
If you and your spouse were both born before January 2, 1954, you can opt to restrict your application, applying for one of the benefits and delaying the other until a later date. This allows you to collect delayed credits on the one you chose to delay.
This is because if you are eligible for both your own and a spouse’s benefits, you will receive your own benefits first. If your spouses are higher, you also receive compensation to equal that higher benefit. Since you can switch at any time, you can maximize these by waiting to collect on the benefits that can yield the higher percentage on delayed credits.
Note that those born after January 2, 1954 must apply for both in what is called a “deemed filing” and receive the higher of the two benefits.
More details on this can be found at https://www.ssa.gov/pubs/EN-05-10035.pdf.
6. Include Family Members
Children who are unmarried can get up to half your benefit if they are younger than 18, 18-19 years old and a full-time student no higher than grade 12 or are 18 or older and have a qualifying disability that began before the age of 22.
Survivor benefits are paid to widows, widowers, and dependents of eligible workers.
Maximizing Social Security benefits involves thoughtful planning. By understanding these strategies, you can enhance your financial security during retirement. Remember, every year of work counts toward a better future.
Disclaimer: Memorial Planning is not a financial advisor. The content in this article is for informational purposes only and should not be considered financial advice.