Social Security income (SSA) is a lifeline for many people in the United States. The monthly amount you receive depends on the number of years you have worked and the highest earnings you have achieved during that time. Although these benefits are generally fixed, there is a way to increase them by up to 28%. In this article, we explain how to achieve this.
The most determining factor for the amount of money you will receive upon retirement is the timing of your benefits claim. The rule is simple: the older you are when you claim, the higher your benefits; if you claim earlier, you will receive less.
Timing Matters: When to Claim Your Social Security Benefits
According to various studies and analysts, the difference between claiming benefits at age 62 (the earliest age you can do so) and age 70 (the maximum age) can be up to 77%. This means that waiting longer to claim your benefits can result in significantly higher amounts.
One current strategy that can help you increase your monthly benefit by up to 28% is based on how Social Security calculates your benefits. The SSA considers the 35 years of work with the highest earnings to determine how much money you will receive monthly upon retirement.
This number is used in the Social Security benefits formula to determine your Primary Insurance Amount (PIA). The PIA is the amount you would receive if you claim benefits in the month you reach your full retirement age (FRA).
For those born in 1954 or earlier, the FRA is 66 years. From that date, the FRA increases by two months for each year after 1954 until reaching 67 years for those born in 1960 or later. This means that delaying your benefits claim until age 70 can result in a check that is between 24% and 32% higher than your PIA, depending on your year of birth.
Suspension of Benefits: A Viable Option
Even if you have already claimed and started receiving your benefits, you still have options to increase your future income. You can request the SSA to suspend your benefits. This suspension would begin the month after your request is approved, allowing you to accumulate delayed retirement credits and eventually receive a higher check.
If you decide to delay your retirement beyond your FRA, you will accumulate delayed retirement credits, which increase your monthly benefit by up to 8% for each year you postpone the claim, up to age 70. This increase can result in a significantly higher benefit in the long run.
For example, if your FRA is 66 years and you decide to wait until age 70 to claim your benefits, you could see a 32% increase in your monthly payments. This increase is due to the delayed retirement credits you have accumulated during those additional four years.
Planning for the Future: Maximizing Your Benefits
Maximizing your Social Security benefits requires careful planning. Here are some tips to ensure you get the highest possible benefit:
- Know Your FRA: Knowing when you reach your full retirement age is crucial for planning when to start receiving your benefits.
- Evaluate Your Health and Financial Needs: Delaying benefits may not be the best option for everyone. Consider your health and financial situation before making a decision.
- Consult a Financial Advisor: A professional can help you understand the tax implications and plan according to your specific circumstances.
- Review Your Earnings Record: Make sure your earnings record with the SSA is correct. An error could affect the calculation of your benefits.
Increasing your Social Security benefits nearly 30% is possible if you understand and apply the right strategies. The timing of your benefits claim, the suspension of benefits, and the accumulation of delayed retirement credits are key factors in maximizing your income. Careful planning and considering your individual needs will allow you to make informed decisions and ensure a more secure financial future.