4 Social Security Secrets for Even Bigger Checks | Smart Change: Personal Finance


(Christy Bieber)

More money from Social Security can provide you with a more secure pension. After all, cost-of-living adjustments have been built into the program to ensure that purchasing power is not eroded by inflation. And the benefits are guaranteed for life.

Unfortunately, the average Social Security benefit isn’t very large, coming in at just $1,661 per month.

The good news is that there are ways to increase your benefits and make more money with each check. Here are the Social Security secrets you need to know to make that happen.

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1. You can increase your benefit by applying for it later

Many people do not really understand how the age at which you apply for benefits affects the amount you receive. But this can have a bigger impact than almost any other decision you make.

Each retiree is assigned a full retirement age (FRA). For those born in 1956 or later, that is between 66 and four months and 67 years. But at that age you do not need to apply for benefits. You can start checks at 62. However, for every month you get a check before your FRA, your payments shrink. On the other hand, you can wait after your FRA, and for every month you delay until age 70, your benefits grow.

The impact of early or late submission is significant. If you receive benefits at age 62 and your FRA is 67, your monthly payments could be as much as 30% less than your standard benefit would have been had you waited. But they can go up to 24% compared to your standard benefit if you start at age 70.

If you just wait an extra year or more to get Social Security, your checks will be much bigger and bring in more monthly income for the rest of your life.

2. Working more years for a higher salary will increase your benefits

Benefits are also based on your earnings, not just the age at which you claim them. Your standard benefit at full retirement age is equal to a percentage of your average inflation-adjusted income during the 35 years your salary was highest.

This means you want to work for at least 35 years to avoid including years of $0 pay when calculating your median income because that would narrow your Social Security checks. But it can even pay off to work even more years if your salary has increased over time.

For each additional year that you work over the age of 35, one of your working years is not included in your benefit calculation. So if you put more years into a higher-paying job, you can substitute some less-earning years in the formula used when your check amount is calculated.

3. Coordination with your spouse can help increase your combined benefits

If you’re married, you may be surprised at how big the impact can be of coordinating with your spouse on your Social Security benefits.

If you are married, you can claim spousal maintenance instead of your own pension benefits. The partner allowance can be up to 50% of your partner’s standard benefit at full retirement age. However, you can only get them if your partner has already applied for retirement benefits. So you need to decide whether the higher earner should start taking the checks as soon as possible so that the partner benefits can begin as well.

On the other hand, in some cases it would pay off for the higher earners to defer their claim so that they can maximize their greater benefit. This would also result in more survivor benefits, as the last survivor in your marriage gets to keep the higher of the two checks that both partners received.

If a lower earner can claim some money to keep the family afloat, it can cause the higher earner to slow down. This may be the better choice for some families.

4. The Right Type of Retirement Plan Can Help You Keep More of Your Social Security Money

Finally, you want to think about what kind of retirement account you use to save money.

Social Security benefits become taxable once countable income exceeds a certain threshold. But only distributions from traditional IRAs or 401(k)s count in determining whether distributions are taxed — distributions from Roth accounts don’t count.

If you want to be able to get as much out of your investment accounts as you want without worrying about making Social Security taxable, you should seriously consider investing in a Roth throughout your career. This can leave you with bigger Social Security checks because you don’t have to give the IRS a discount.

Now that you know these four big secrets to maximizing your monthly Social Security payment, hopefully you can make the choices you need to ensure your financial security as a retiree.

The $18,984 Social Security Bonus Most Retirees Completely Overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can give your retirement income a boost. For example, one simple trick could save you as much as $18,984…a year! Once you know how to maximize your Social Security benefits, we think you can retire confidently with the peace of mind we all strive for. Click here to learn how to learn more about these strategies.

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The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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