Four Social Security Tips to Get Even Larger Checks

This article was originally published here

The average Social Security payment isn’t that large, but it will be a significant source of income in retirement. You can have a more secure retirement if you receive higher Social Security benefits. After all, the program includes cost-of-living adjustments to help prevent the loss of purchasing power due to inflation. Sadly, the average Social Security payout is only $1,661 per month, which is relatively small.

Thankfully there are strategies you may use to increase your perks and receive larger paychecks overall. Here are some Social Security tips that will help you achieve that.

1. Maximize your monthly paycheck by filing it later.

Many people are unaware of how your age at the time you apply for social security benefits influences the amount you get. But compared to practically any other choice, this one could be more significant.

A full retirement age (FRA) is given to each retiree. The FRA age ranges from age 66 to 67 for people born in 1956 or after. You can file for social security once you clock age 62, but it’s optional.

Your monthly benefit amount decreases each month you receive a check before your FRA. On the other hand, you can postpone your FRA, and your benefits will increase for every month you wait until age 70.

The effects of filing early or late are significant. Your monthly benefits may be as much as 30% less than your normal benefits would have been had you waited if you began collecting benefits at age 62 and your FRA is 67. However, if you file at 70, it could rise by as much as 24% compared to your current benefit.

So simply delaying your Social Security benefits for an additional year or more will result in substantially larger checks and a higher monthly income for the rest of your life.

2. Increasing your benefits by working longer and earning more money.

Not only are benefits based on your age when you apply, but also your wages. Your average inflation-adjusted earnings over the 35 years when your salary was highest will be used to determine your standard benefit when you reach full retirement age.

You must work for a minimum of 35 years to avoid adding years of $0 wages when determining your average earnings, reducing your Social Security benefits. However, if your wage has increased over the years, it may be advantageous to continue working.

Your benefits calculation will disregard one of your work years for every year you continue to work after 35 years. You can therefore replace some lower-earning years in the calculation used to determine your check amount by working longer at a job that pays more.

3. Working together with your spouse can help you maximize your benefits.

If you’re married, you might be shocked to learn how much your spouse’s cooperation might affect the amount of your Social Security payment.

You can use your spouse’s retirement benefits in place of your own. Up to 50% of your partner’s normal pension at full retirement age may be covered by spousal benefits. However, you can only get them if your spouse has already applied for retirement benefits.

As such, you must decide if the higher earner should start checks as soon as possible so that spousal benefits can also start.

However, there are several situations where it makes sense for the higher earner to put off filing so they can maximize their larger benefit. This would also result in additional survivor benefits since the last living spouse in your marriage gets to keep the higher of the two checks either partner was getting.

The higher earner could postpone if a lesser earner can claim some funds to support the family. This might be the wiser decision for some families.

4. You can keep more of your Social Security benefits if you choose the right retirement plan.

Finally, consider the type of retirement account you use to save money. Social Security benefits are taxed once countable income reaches a particular level. However, withdrawals from Roth accounts do not count when assessing whether benefits are taxed; only distributions from standard IRAs or 401(k)s do.

Consider investing in a Roth throughout your career if you want to be able to withdraw as much money as you like from your investment accounts without worrying about making Social Security taxable. As a result, you might receive higher Social Security payments since you won’t have to pay the IRS a portion of your benefits.

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M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected]