8 Ways to Increase Social Security Benefits
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8 Strategies to increase Social Security Benefits
The option of delaying the start date is a way to maximize your monthly return, but other options are also worth considering.
by Liz Weston, CFP(r) Senior Writer | Personal finance economics, credit scores Liz Weston, CFP(r) is a personal finance columnist, co-host on”Smart Money,” co-host of the “Smart Money” podcast, award-winning journalist and creator of five novels on financial matters, among them the bestseller “Your Credit Score.” Liz has appeared on numerous national radio and television programs including”Today,” the “Today” show “NBC nightly news,”” The “Dr. Phil” show, as well as “All things considered.” Her columns are carried through The Associated Press and appear in hundreds of media outlets each week. Prior to joining NerdWallet she was a writer columns for MSN, Reuters, AARP The Magazine and the Los Angeles Times. She lives with her family in Los Angeles with a husband along with a daughter and a golden retriever who is a co-dependent.
Dec 21, 2022
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Knowing how to increase Social Security benefits is important, since those checks will likely be the main source of your retirement income.
Many people do not comprehend the way Social Security really works. They claim too early, miss out on crucial benefits, and fail to use strategies that can boost their earnings over their lifetime. Their mistakes can cost them up to $250,000, as researchers have estimated.
There are 8 ways to increase you Social Security benefits.
In this article, and Show More
1. Refrain from submitting your application
Social Security retirement benefits increase approximately 5% to 7% each year that you delay between the earliest age of claiming at 62 years old and the retirement age at full retirement at 66 and 2 months and rising to 67 for people born in 1960 or later.
The return you get is higher if you delay retirement beyond full retirement age. Increase your payout by 8% each year you wait to apply until age 70, when the benefit is at its maximum.
A tip for the average person: You prefer to delay their application due to the large body of research that takes into account longer life spans as well as current rates of interest and survivors’ benefits. Financial planners often encourage their clients to utilize other sources, like retirement savings, if it permits them to delay the application process.
2. Work longer
Social Security is calculated based on the highest earning 35 years. You may be able to get more benefit working for longer hours if you make enough money to substitute the lower-paying years with one that is more lucrative.
Individuals who had time off to care for families or otherwise had breaks in their employment may find that working longer hours can help increase their benefit. (Note it is important to note that should you start Social Security early, continuing to work may temporarily decrease the amount you receive.) Additionally, women’s earnings are more likely is higher than that of a male later in life, increasing the potential payoff from continuing to work.
Pro Tip: If you start Social Security early, your benefit will be reduced by $1 for every $2 you earn above the limit. This will be $21,240 by 2023. The earnings test will end at the age of retirement and it’s generally best to wait at least until then to apply.
3. Earn more
Another way to increase the amount of your next Social Security pay is to increase your earnings as many years as you can. “Maxing out” in 2023 indicates that you’ve made $160,200 or more which is the maximum amount of income that is subject to the 6.2 percentage Social Security payroll tax. If you earn the maximum amount during all of your 35 highest-earning years, you’ll qualify for the maximum Social Security benefit at your full retirement age. This is $3,627 per month for 2023.
Pro tip: Sometimes self-employed people will try to reduce the portion of their earnings that is tax-exempt however, that strategy could end up costing them when it’s time to file for Social Security. A little bit of extra tax in the short-term may pay off in the long run with a higher income, adjusted for inflation.
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4. Consider your spouse
Some lower-earning spouses could get more from taking an spousal benefit rather than taking their own retirement benefit. Spousal benefits could be as much as 50 percent of what the highest earner receives at his or the complete retirement. The amount is discounted when it is started earlier. Typically the higher-earning spouse needs to be receiving an income-based retirement benefit from the other partner to get the spousal benefits. In the past, higher earners could “file and then suspend” to let their own benefits grow however, that’s no longer an option.
When you submit your application, Social Security will compare the benefits of your spouse to your own retirement benefit and award you the greater of the two. In most cases, you won’t be able to change from an spousal benefit to your own benefit later even if your benefit is larger. (People born prior to the date of. 2, 1954, have the possibility of filing the “restricted request” for benefits related to spousal support only, and then changing to their own benefit later.)
Couples should also think about the benefits of survivorship in taking Social Security decisions. If one spouse dies the survivor will start getting only one check — the bigger of the two checks the couple received. The loss in income due to the check lost could be significant. Couples can help mitigate the harm by making sure that the check that remains is as large as possible. It is usually necessary to have the earner with the highest earnings delay the date of Social Security typically for at least a few years until full retirement age.
Tips for coordinating benefits with your spouse could get complicated. Take a look at the Social Security claiming calculator to consider your options. There’s a free one at the AARP website as well as the option to purchase more advanced version on Social Security Solutions ($20 and up) or Maximize My Social Security ($39 and up).
5. Investigate divorced spouse benefits
If you’re unmarried and an earlier marriage lasted at minimum 10 years, you could qualify for spousal benefits in accordance with your ex’s job records. The amount could be up to 50% of the worker’s benefit at his or her fully retired age. If you remarry, however the benefit for divorced spouses stops. You must be age 62 in order to receive spouse benefits.
If your ex has died and the marriage lasted for at least 10 years, you may be eligible for survivorship benefits of up to 100% of your ex’s compensation. You may remarry at age 60 or over (or 50 and older when you are disabled) and still get benefits for divorced survivors. Benefits for survivors and divorced survivors start at the age of 60, or at age 50 if the survivor’s disabled or at any other age when you’re taking care of your ex’s child who is younger than 16 or has disabilities (and in that situation, the 10-year marriage requirement is waived). Survivors may switch to their own benefit later if that’s larger or more substantial, and vice versa.
Pro tip: Your ex must be at or above 62 for you to receive a divorced spousal benefit. However, the spouse it isn’t necessary to be receiving his or the benefit of his or her own. (That’s distinct than regular benefits to spousal, which usually need the worker who is primary to be in prior to when spouses can be eligible for benefits.) The benefits for survivors are based on the amount your ex received or would have received at full retirement age. (If the ex delays the start of benefits past the age of full retirement, the survivor’s benefit will be increased by those delays in retirement benefits.) If you begin receiving benefits prior to your full retirement age, however your benefit will be cut in half.
6. Add your minor child
If you’re currently receiving Social Security retirement or disability benefits, your offspring may be eligible for a check as well. Minor children who are not married may be eligible for up to 50 percent of the primary worker’s retirement or disability benefit. The child benefit usually ends at the age of 18, but it can extend to age 19 when the child is at high school. Children benefits may also be offered to people who are 18 and over who are disabled, and their disability started before turning 22.
There is an “family maximum” that restricts the amount a family can collect on the basis of one worker’s earnings history. The maximum amount is between 150 188% and 150 percent of the monthly benefit at full retirement age. If your total family benefits exceed the limit, the worker would continue to receive a regular check however the checks for dependents will be cut in proportion.
Pro tip The benefits for families, including spouse and child benefits will be evaluated by Social Security’s earning tests and can be reduced or eliminated if the primary employee begins benefits before the start of the year and continues to work.
7. Suspend your benefit
If you took on Social Security early and decided that was a mistake, you can suspend your benefit at the time you reach . This will enable your benefit to accrue the delayed retirement credit that increases the amount you get by 8% each year you delay until age 70, when the benefit is at its maximum. There is no obligation to pay back the benefits you’ve earned.
Suspending your benefit, however does not affect the benefits of anyone else receiving checks based on your work history, such as your spouse or minor child. The possibility of an increase in your earnings may not make up for the loss of the benefits your dependents receive.
Pro tip: Sometimes Social Security workers incorrectly tell people that they are not able to stop benefits. If that is the case take them to this webpage on the site.
8. Make a second attempt
If you are unable to decide within a year of applying for Social Security, you can cancel your application and pay back the amount you’ve received in benefits. This will reset the clock on your benefits , so that you can receive the 7% – an 8% increase each year from delay in your application. You can do this only once throughout your life, and you can’t withdraw your application within 12 months.
Pro tip: Removing your application is distinct from suspending your benefits. You can suspend your benefit either in writing or verbally at anytime after you reach full retirement age. In order to withdraw, you must fill out the Social security form SSA-521, which you must fill out within a year of applying and pay a sum equal to all the benefits you and your family members have received, which includes any Medicare premiums that are deducted from your paychecks.
The author’s bio: Liz Weston is a columnist for NerdWallet. She is a certified financial planner as well as the author of five money books including “Your credit score.”
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