8 Ways to increase Social Security Benefits
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8 Strategies to Enhance Social Security Benefits
The option of delaying the beginning date is one method to maximize your monthly return, but other options are also worth looking into.
By Liz Weston, CFP(r) Senior Writer | Personal Finance, credit scores, economics Liz Weston, CFP(r) is a personal financial columnist, host of the «Smart Money» podcast, award-winning journalist and writer of 5 books about finances, which includes the bestselling «Your credit score.» Liz has appeared on numerous national radio and television shows, including the «Today» talk show «NBC Nightly News,» The «Dr. Phil» show, and «All things considered.» Her columns are carried through The Associated Press and appear in hundreds of media outlets every week. Before joining NerdWallet, she wrote columns for MSN, Reuters, AARP The Magazine and the Los Angeles Times. She lives in Los Angeles with a husband, a daughter and a golden retriever that is co-dependent.
Dec 21, 2022
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Finding ways to increase Social Security benefits is important, since those checks are likely to be the main source of your retirement income.
Unfortunately, many people don’t understand the way Social Security really works. They make claims too early, miss out on important benefits and don’t take advantage of strategies that could increase their income over the course of their lives. Their mistakes can cost them as much as $250,000, according to research.
These are the eight methods to boost the amount of your Social Security benefits.
In this article and in this article and More
1. Delay your application
Social Security retirement benefits grow approximately 5% to 7% every year you wait between the earliest claiming age, 62, and your full retirement age at 2 months and 66, and rising to 67 for people born in 1960 and later.
The benefit you receive is higher if you prolong your retirement past retirement age. boost your check by 8% for each year you wait to apply until you reach age 70, at which point your benefits are at their maximum.
Pro tip: The majority of people are better off delaying due to the large amount of research taking into consideration longer lives as well as the current rates of interest and survivors’ benefits. Many financial planners encourage their clients to tap other resources, such as retirement funds, if that permits them to delay applying.
2. Work longer
Social Security is based on the highest earning 35 years. It is possible to increase your benefits by being more productive if you can earn enough to replace one of your less-paid years with a better-paying one.
People who had time off to care for families or otherwise had interruptions in their work may find that working longer hours can increase their benefit. (Note it is important to note that should you begin Social Security early, continuing to work may temporarily decrease your benefits.) In addition, a woman’s salary is more likely more than men’s will increase as they age, increasing the potential payoff from continuing to work.
Pro Tip: If you start Social Security early, your benefits will be cut by $1 for every $2 you earn over the limit. This will be $21,240 by 2023. The earnings test will end at your full retirement age, so it’s usually best to wait at least until the time you reach that age to apply.
3. Earn more
Another way to increase the size of your Social Security pay is to increase your earnings over as many years as you are able to. «Maxing out» in 2023 indicates that you’ve earned $160,200 or more, which is the highest amount of income subject to the 6.2% Social Security payroll tax. If you earn the maximum amount in all 35 of your top-earning years, then you’ll qualify for the highest Social Security benefit at your full retirement age. That’s $3,627 per month in 2023.
A tip for self-employed workers will seek to reduce the portion of their income subject to taxation on payroll, but that maneuver can end up costing them when the time comes to apply to Social Security. A little bit of extra tax in the short term can pay off in the form of the long run with a higher, inflation-adjusted income.
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4. Consider your spouse
Certain spouses with lower earnings could benefit more from taking an spousal benefit rather than getting their own retirement benefit. Spousal benefits can be as much as 50 percent of what the highest earner earns at his complete retirement. The amount is discounted when it is started earlier. The spouse with the highest earnings needs to receive a retirement benefit for the other spouse to receive a spousal benefit. The past was when people with higher incomes could «file and then suspend» to let their own benefits grow but it’s not an option.
When you submit your application, Social Security will compare the spousal benefits to your own retirement benefit and give you the larger of both. In most cases you will not be able to switch from an spousal benefit to your own benefit in the future regardless of whether your own benefit is larger. (People born before the date of. 2 1954 have the option of submitting a «restricted application» for spousal benefits only and then switching to their own benefit later.)
Couples should also take into consideration the benefits of survivorship when they make Social Security decisions. If one spouse dies, the survivor will start getting only one check — the larger than the other two check that the couple was receiving. The decrease in income resulting from the lost check can be substantial. Couples can help mitigate the harm by making sure that the amount of the check remaining is as large as possible. That typically requires having the one with the highest income delay the start of Social Security, preferably at least until full retirement age.
A tip for you: Coordinating benefits with a spouse can get complicated. Consider using a Social Security claiming calculator to explore your options. There’s a free one at the AARP site, or you can pay for a more sophisticated versions at Social Security Solutions ($20 and up) or Maximize My Social Security ($39 and up).
5. Investigate divorced spouse benefits
If you’re not married but an earlier marriage lasted at minimum 10 years, you may be eligible for spousal benefits in accordance with your ex’s job history. The amount can be up to 50% of the worker’s benefit when he or she reaches full retirement age. If you get married, however the benefit for divorced spouses is canceled. You must be age 62 in order to receive spouse benefits.
If your ex has died and your marriage lasted at minimum 10 years, you may be eligible for survivorship benefits up to 100% of your ex’s benefit. You may remarry at age 60 or over (or 50 or older when you are disabled) and still be eligible for benefits for divorced survivors. Benefits for survivors and divorced survivors can begin at age 60, or 50 if the survivor’s disabled, or at any age in the case of taking care of your ex’s child less than 16 or is disabled (and in that case the requirement for marriage of 10 years is waived). People receiving survivor benefits can change to their own benefits in the future if it’s greater, and vice versa.
Pro tip: Your ex has to be at least 62 for you to receive a divorced spousal benefit. However, the spouse is not required to receive her own benefit. (That’s distinct than regular benefits to spousal that typically will require the main worker to submit prior to the spouse is eligible to receive any benefits.) Survivor benefits are based on what your ex was getting or would have received at the full retirement age. (If you and your spouse delayed the start of benefits after reaching the age of full retirement, the survivor’s benefit will be multiplied by the delayed retirement credits.) If you start benefits before your own full retirement age, however your benefit will be decreased.
6. Add your minor child
If you’re receiving Social Security retirement or disability benefits, your offspring may be entitled to an additional check. A minor who is not married can be eligible for up to 50 percent of the primary worker’s disability or retirement benefits. This child benefit typically ends at 18, but can be extended to 19 in the case of a child who is at high school. Child benefits are also available for those who are 18 or older who are disabled, and the disability began prior to the age of 22.
There is an «family maximum» that restricts the amount families can earn based on one worker’s earnings record. The maximum amount is between 150 percent and 188 percent of the monthly salary at full retirement age. If your family’s total benefits would exceed the cap and the worker continues to receive a regular check however the checks for dependents would be proportionately reduced.
Pro tip A word of caution: Family benefits, which include the benefits for spouses and children can be subject to the Social Security earnings tests and could be cut or eliminated if the primary employee starts benefits early however, they continue to work.
7. Suspend your benefit
If you started Social Security early and decided it was a mistake, you can suspend your benefit once you reach . This will enable your benefit to accrue the delayed retirement credit, which increases the amount you get by 8% each year that you delay it until 70, when the benefit is at its maximum. There is no obligation to repay the benefits you’ve received.
Suspending your benefit, however does not affect the benefits of those who are receiving benefits based on your employment background, like your spouse or minor child. The potential increase in your benefit might not cover the loss of your dependents’ benefits.
Pro tip Pro tip: Sometimes Social Security workers incorrectly tell people they cannot stop benefits. If that is the case take them to this page on the website.
8. Use a do-over
If you decide to change your mind within a year after applying in the year following your application for Social Security, you can make a withdrawal and repay all you’ve received in benefits. This will reset the clock on your benefits so you’ll receive the 7% – an 8% increase each year due to delaying your application. This can only be done once throughout your life, and you can’t withdraw your application after 12 months.
Pro tip: Withdrawing your application is distinct from suspending your benefit. You can suspend your benefit either in writing or verbally at anytime after you reach the age of full retirement. To withdraw, you must fill out Social Security Form SSA-521 in the first a year of applying and pay an amount equal to all benefits you and your family have received, including any Medicare premiums deducted from your check.
Author bio Liz Weston is a columnist for NerdWallet. She is certified as a financial planner and author of five books on money, including «Your credit score.»
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