Although certain aspects of Social Security are out of your control — such as what percentage of your paycheck is withheld for taxes and what the full retirement age is — others are not. In fact, with some planning, you actually do have some control over the amount you will get paid in Social Security benefits.
As with anything investment- or income-related, the earlier you can start planning, the better. Here’s a list of some of the things that are in your control that you can use to increase your Social Security payment.
Earn as Much as You Can
The amount you earn in Social Security retirement benefits is not fixed. Rather, your work history plays a big role in how much Social Security you can earn. Up to certain limits, the more you can earn while working, the larger the Social Security check you’ll get after you retire.
The actual Social Security retirement benefit calculation is quite complicated, involving average indexed monthly earnings (AIME) “bend points,” and other intricate formulas. But the bottom line is that earning as much as you can while working is the best way to maximize your Social Security retirement benefits when you stop.
Work and Pay Social Security Taxes for at Least 35 Years
Although the size of your income is an important factor when it comes to computing Social Security benefits, so too is the length of your career. For payout purposes, the Social Security Administration only uses your highest 35 years of earnings. If you only work for 20 years, then 15 of the work years that are used to calculate your benefits will show earnings of zero.
This is why it is critical to work for at least 35 years if you’re looking to maximize your Social Security payout.
Wait Until Full Retirement Age To Draw Benefits
You can claim your Social Security retirement benefits as early as age 62, and for many Americans, that lure is irresistible. In fact, according to recent studies, up to 50% of men claim Social Security at age 62, and as many as 70% claim before full retirement age.
While you will get your money sooner if you file at age 62, you’re also locking in a permanent reduction in your monthly benefit amount by as much as 30%. If you’re planning on living a long life in retirement, you could be significantly short-changing your benefits if you don’t want until full retirement age to claim.
If You Can, Defer Payments Until Age 70
If you’re truly looking to max out your Social Security benefits, don’t just wait until full retirement age. The Social Security Administration allows you to defer your Social Security payments until age 70, and waiting longer can translate to a big bump in your payout.
From age 67 to 70, Social Security benefits jump by a whopping 8% per year. This is close to the long-term average return of the stock market, and you won’t be taking any risk at all. Claiming at age 70 instead of age 67 results in a monthly check that’s more than 24% higher, meaning if your full retirement payout is $2,000 per month, you’ll receive over $2,500 instead by waiting just three years — a significant increase.
The maximum possible Social Security retirement payout for someone who earns high wages for 35 years and waits to claim benefits until age 70 is $4,194 for 2022.
Check for Spousal, Survivor and Disability Benefits
Although Social Security is primarily thought of as a retirement benefit, there are other significant aspects to the program that can result in money coming your way. For example, if you’re married to a spouse who earns a benefit more than twice your own, you may be able to claim a spousal benefit instead. Spouses are entitled to a payout of up to 50% of the amount of their Social Security-collecting spouse, so if that benefit exceeds your own, you can boost your payout. This holds true even if you’re divorced, as long as you were married for at least 10 years first.
Widows or widowers of deceased benefit earners can also claim a survivors benefit, as can qualifying unmarried children. Social Security also provides disability benefits if you are not expected to be able to work for at least one year, with the average payout reaching $1,358.
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