As you are undoubtedly aware, waiting pays off if you want to receive the largest Social Security benefit. Your first check can be received as early as age 62, but you must wait until full retirement age (FRA), or age 67 if you were born in 1960 or later, to be eligible for your full benefit.
However, if you can wait until your FRA, it might be worthwhile to delay starting to receive Social Security benefits by a little bit. Here is the precise action you must take to extract an additional 204 percent out of social security.
Unlocking the Hidden Potential of Social Security: Boost Your Retirement Income by 24%
Social Security is a vital lifeline for many retirees, providing a steady stream of income during their golden years. However, many people are unaware of strategies that can significantly increase their Social Security benefits, potentially adding an extra 24% to their monthly checks.
Understanding the Social Security Benefit Formula:
Your Social Security benefit is calculated based on your lifetime earnings, specifically your 35 highest-earning years. The formula takes into account your age at retirement, your average indexed monthly earnings (AIME), and a complex set of factors.
Maximizing Your Benefit:
1. Increase Your Earnings:
The more you earn, the higher your AIME will be, leading to a larger Social Security benefit. If possible, consider pursuing career advancements, taking on additional responsibilities, or starting a side hustle to boost your income.
2. Work for at Least 35 Years:
The Social Security formula only considers your 35 highest-earning years. If you have fewer than 35 years of earnings, your benefit will be reduced. Aim to work for at least 35 years to maximize your potential benefit.
3. Delay Your Retirement:
This is the most impactful strategy for increasing your Social Security benefit. For every year you delay claiming benefits past your full retirement age (FRA), your benefit will increase by 8%. This means waiting until age 70 instead of 67 can boost your benefit by a substantial 24%.
Important Considerations:
- Health: If you have health concerns or a family history of shorter lifespans, claiming benefits earlier may be a wise choice.
- Financial Needs: If you have limited savings or need immediate income, delaying benefits may not be feasible.
- Investment Returns: Consider the potential returns on your investments compared to the guaranteed growth of delayed Social Security benefits.
Example:
Let’s say your FRA is 67 and your estimated benefit at that age is $2,000 per month. If you delay claiming benefits until age 70, your benefit would increase to $2,480 per month, an extra $480 per month or $5,760 per year. Over a 20-year retirement, this translates to an additional $115,200 in Social Security benefits.
Additional Tips:
- Review your earnings history: Ensure the SSA has accurate records of your earnings to avoid any discrepancies in your benefit calculation.
- Explore spousal benefits: If your spouse earned less than you, they may be eligible for spousal benefits based on your earnings record.
- Consider working part-time after retirement: This can increase your Social Security benefits and provide additional income.
By understanding the Social Security formula and implementing these strategies, you can significantly increase your retirement income and enjoy a more financially secure future. Remember, maximizing your Social Security benefits is a long-term investment that can pay off handsomely in your golden years.
How to boost your Social Security by 24%
You must work for at least 35 years, earn more money, and postpone receiving your benefit as long as you can in order to optimize your Social Security benefit.
If you take Social Security at 62, your benefit will be about 30% lower than it would be if you waited until FRA. But you dont have to start benefits at your FRA.
In fact, holding out beyond FRA can be quite lucrative. You will receive an 8.8% delayed retirement credit for each year that passes after your first free retirement account. After that, your benefits end at age 70, so there’s no need to delay any longer. In case your FRA is 67, postponing until the age of 2070 would increase your benefit by 2024 percent.
| Claiming Age | Maximum Social Security Benefit in 2022 |
|---|---|
|
62 |
$2,364 |
|
67 |
$3,345 |
|
70 |
$4,194 |
Data source: Social Security Administration
One exception: If youre taking spousal benefits, you wont be able to earn delayed retirement credits. Youll receive your maximum benefit at FRA.
TLDR version of “Explaining Social Security: The 8 Things You Should Know About Your Benefits”
What if I’ve already started Social Security?
You can change your mind and choose not to receive delayed retirement credits, even if you have already begun receiving Social Security benefits. You can request that Social Security suspend your benefits once you reach FRA. Benefits suspension would take place for the month following the request. When you reach 70, Social Security will automatically resume your payments at a higher rate to reflect the credits you have accrued.
Three strategies to delay applying for Social Security if you are forced to retire early
My Review: Motley Fool’s $16,728 Social Security Bonus
FAQ
What is the secret bonus for Social Security?
How much do most retirees get in Social Security?
Is there a lump sum bonus for Social Security?
Could a social security bonus boost your retirement income?
Offer from the Motley Fool:The $21,756 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” could help ensure a boost in your retirement income.
Can a retiree get a bonus check from Social Security?
There is no specific “bonus” retirees can collect from the Social Security Administration. For example, you’re not eligible to get a $5,000 bonus check on top of your regular benefits just because you worked in a specific career. Social Security doesn’t randomly award money to people.
Are Social Security benefits worth it?
Since these benefits are an important source of funds for many seniors, it’s worth making the effort. The $21,756 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.
Can you get a social security bonus if you delay retirement?
In doing so, you can get a Social Security bonus in the form of a higher benefit amount. The bonus is worth roughly 8% more for each year you delay benefits past full retirement age. Waiting until age 70 to claim Social Security benefits can result in a larger check but you have to consider how realistic that option is.