(Sam Swenson, CFA, CPA)
Getting the most out of Social Security is a common goal for those nearing retirement, and it’s understandable: With inflation rising for decades and retirement plans becoming increasingly unpopular, retirement funding isn’t as smooth as it once was. The good news is that if you’re still employed, there are a number of different avenues you should opt out to ensure that you get the maximum Social Security benefits you are entitled to.
Here, we’ll look at three of the most manageable things you can do to ensure you get the most from your Social Security Administration (SSA) when it comes time to apply for benefits.
1. Delaying deposit to get benefits
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The longer you wait to claim Social Security, the more you get each month. It’s that easy.
You first qualify to claim benefits at age 62, but have the option to wait until 70. Waiting past your full retirement age (FRA) will help you secure a much larger monthly check, and will likely increase your cumulative lifetime benefits if your life expectancy extends to Your eighties.
Along the same lines, keeping your health to the maximum extent possible is one behavior that will allow you to wait until age 70 before enrolling. Those with a shorter life expectancy may need to receive Social Security sooner, which will eventually limit their cumulative lifetime benefit unless they live longer than the actuarial tables indicate.
With that said, so much of your health profile is only under your control. There is absolutely nothing wrong with getting Social Security benefits at age 62 if you need them.
2. Earn more if you can
The amount of the benefit calculated will be affected by the number of years you worked as well as the amount you earned during those years. Wages are taxable up to the maximum taxable Social Security wage base for retirement insurance purposes; For 2022, that amount is $147,000. In other words, you’ll pay into the Social Security System on every dollar you earn, up to $147,000.
If you earn less than this amount, you may consider taking on extra work to increase your retirement benefits in the future. All payments in the system, even the taxable wage base, will have a positive effect on the amount you can ultimately claim. Side activities or part-time overtime can go a long way when it comes to financing the retirement you want.
3. Find a job you enjoy
Not only are you likely to earn more, but you are also more likely to stay in a job if you derive some achievement from it. Because Social Security benefits are calculated on the 35 years that make the most profit, you can expect higher retirement benefits if you avoid having the zero-income years on your record.
For example, suppose you were to take time off early in your career to care for an elderly relative or to take time off to travel. Whatever the reason for the gap in your work history, it makes sense to have as many years of work as possible when it comes to future retirement benefits. Finding new work that you enjoy will pay off in the future, in the form of higher Social Security checks.
Learn the rules for the highest benefit amount
Part of receiving a higher retirement check is simply knowing how to calculate the amounts and then acting accordingly. Probably the easiest variable to manage is when you claim benefits. By deferring your claim for as long as you reasonably can, you can set up a higher monthly check for yourself for the rest of your life. Not the worst deal.
Remember, too, that earning more (and finding a job you actually enjoy) can go a long way when it comes to your final benefit amount. The work you enjoy is not always the same as work. Staying on the course in a career can help you qualify for more when it’s finally time to retire, so try to find work that you don’t mind doing.
Like most things in life, getting higher Social Security benefits is about controlling what you can control. By knowing how benefits are calculated, you will prepare yourself for a more financially secure retirement.
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