Maximizing your Social Security benefits can have a significant impact on your financial well-being in retirement.
While the amount you receive in benefits is based on your lifetime earnings and the age at which you start claiming benefits, there are some little things that retirees can do to boost their Social Security income.
Check Your Earnings Record
Your Social Security benefits are based on your 35 highest-earning years, so it’s crucial to make sure your earnings record is accurate. Check your Social Security statement annually for any discrepancies or missing earnings, and correct any errors as soon as possible. You can check your Social Security statement online by creating a my Social Security account.
Delay Claiming Benefits
While you can start claiming Social Security benefits as early as age 62, your monthly benefit amount will be permanently reduced if you start claiming before your full retirement age (FRA). On the other hand, if you delay claiming benefits until after your FRA, your monthly benefit will increase by a certain percentage for each month you delay, up until age 70. Delaying benefits can result in a significantly higher monthly income, which can be especially valuable if you expect to live a long time.
Consider Your Spousal Benefits
If you are married or were previously married and the marriage lasted at least 10 years, you may be eligible for spousal benefits. The spousal benefit can be up to 50% of your spouse’s or ex-spouse’s benefit at their FRA. If your own benefit is lower than the spousal benefit, claiming the spousal benefit can increase your Social Security income.
Minimize Taxes on Social Security Benefits
While Social Security benefits are not fully taxable, up to 85% of your benefits can be subject to federal income taxes depending on your income level. To minimize taxes on your benefits, consider strategies such as converting traditional IRA assets to a Roth IRA, investing in tax-efficient mutual funds, or limiting withdrawals from tax-deferred retirement accounts.
If you have not yet reached your FRA and have the option to work part-time, doing so can boost your Social Security benefits in two ways. First, the additional earnings may increase your average indexed monthly earnings, which could result in a higher benefit amount. Second, if you earn enough to offset the reduction in benefits due to claiming early, you can essentially get a higher benefit without having to delay claiming.
Remember, it’s important to consider your own financial situation, health, and life expectancy when making decisions about Social Security. Consult with a financial advisor or the Social Security Administration if you have any questions or need personalized advice.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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