For most retirees, Social Security benefits are only designed to replace approximately 40% of your pre-retirement income.
Roughly 1 in 5 married couples and close to half of unmarried individuals rely on their monthly checks for at least 90% of their income in retirement, according to the Social Security Administration.
For these retirees, there’s a lot riding on Social Security benefits — and the size of those checks can potentially make or break retirement.
Whether you’re going to be relying on Social Security to make ends meet or you simply want to increase the size of your checks, there are a few strategies that can boost your benefits.
1. Delay claiming benefits
One of the most significant factors that affects the size of your checks is the age you begin claiming. If you claim at your full retirement age (FRA) — which is age 67 for those born in 1960 or later, or either 66 or 66 plus a few months if you were born before 1960 — you’ll receive the full benefit amount you’re eligible to collect.
But if you want fatter checks each month, you can delay claiming benefits until after your FRA to receive a bonus amount.
This bonus can be substantial, too; those with an FRA of 67 can receive their full benefit amount plus an additional 24% each month by waiting to claim until age 70. If your FRA is earlier than age 67, you can stand to receive an even bigger bonus by holding off on claiming for as long as you can.
Keep in mind, however, that while you can wait until beyond age 70 to claim, you won’t receive any extra benefits by doing so.
From a purely financial perspective, delaying benefits may seem like the smartest choice. However, it’s not right for everyone, so be sure to think through your decision before you begin claiming. For instance, if you have health issues and don’t expect to live into your 80s or beyond, it might not be worth it to delay benefits. But if you’re healthy and need the bigger checks to get through retirement, holding off on claiming can be a smart choice.
2. Work at least 35 years
While claiming at the right age will affect how much you receive each month, one factor that impacts how much you’re eligible to receive in the first place is your earnings history.
Your basic benefit amount (or the amount you’ll receive by claiming at your FRA) is calculated based on your 35 highest-earning working years. The Social Security Administration averages your income over those years, adjusts it for inflation, and the result is your benefit amount.
You only need to work and pay Social Security taxes for 40 quarters (or 10 years) before you become eligible for benefits, but if you work fewer than 35 years, it will significantly lower your average because you’ll have zeros in your equation to account for the years you weren’t working.
Even if you have worked at least 35 years, you can potentially boost your benefit amount by working longer or increasing your income.
You’re probably earning a higher income now than you were 35 years ago, and because only the years with the highest income are included in your earnings average, you can replace earlier years in your career when you were earning less with more recent years when you’re earning more. Or, if you don’t want to work longer, increasing your income can also result in a higher earnings average and a bigger benefit amount.
3. Take advantage of all the types of benefits you’re entitled to
Most people are familiar with the standard retirement benefit, but there are also other types of Social Security benefits you may be entitled to, including spousal benefits, divorce benefits, and survivors benefits.
Even if you’ve never worked a day in your life, you may still be eligible to collect these types of benefits based on a spouse’s or former spouse’s work record.
With spousal and divorce benefits, you must currently be married (or have been married) to someone who is eligible to receive retirement benefits, and the maximum you can receive is 50% of the amount your spouse (or ex-spouse) is entitled to by claiming at his or her FRA. Also, if you’re eligible for your own retirement benefits, the Social Security Administration will pay out that amount first. Then, if you’re entitled to extra money in spousal or divorce benefits, you’ll receive an additional amount each month.
Survivors benefits are a little different in that they are available to many different family members — not just spouses. If the deceased person was entitled to Social Security benefits, widows and widowers are eligible to claim survivors benefits as long as they’re age 60 or older (or age 50 or older if they’re disabled).
Divorced spouses can also sometimes claim survivors benefits, as can children, parents, and other family members in certain circumstances.
With all of these types of benefits, the Social Security Administration typically won’t notify you if you’re eligible. So if you don’t do your research and apply for the benefits you’re entitled to, you could miss out on extra cash.
If your savings are slim going into retirement, you may end up depending on Social Security benefits to make ends meet. By maximizing your monthly checks, you can boost your disposable income and enjoy your senior years more comfortably.
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