The prospect of future Social Security checks can be vague in the back of your mind, but not paying more attention to Social Security can be a costly mistake – especially when retirement is around the corner.
Here are some steps you can take to make the most of Social Security – in other words, get the most out of the program. Some are best done a few years before you retire, but others are worth doing right now.
Image Source: Getty Images.
Nr. 1: Set up an online account “my social security”
First, here’s something best done as soon as possible: Go to the Social Security Administration (SSA) website and set up a “my Social Security” account. Once you have done this, you can visit at any time and check the SSA record of your income, year after year, and you will also see estimates of your future benefits. This is important because it will help you save and plan for retirement more effectively.
While you are there, it is worth checking to make sure those SSA records are correct. The SSA itself noted: “… if an employer has not reported to us just one year of your earnings, your future social security benefits may be close to $ 100 a month less than they should be. Over the course of a lifetime “That could cost you tens of thousands of dollars in retirement or other benefits to which you are entitled.”
Here’s some context, before you figure out how much money you can expect to raise: The average monthly retirement benefit for Social Security was recently $ 1,514, or about $ 18,000 a year. Of course, if your earnings were above average, you collect more than that – but not te much more. The maximum monthly benefit for those retiring on their full retirement year in 2020 is $ 3,011. That’s about $ 36,000 for the full year – making it clear that you probably need other income streams.
No. 2: Learn what your “full retirement year” is
To help determine how much you can expect to accumulate, you want to know your “full retirement age” – where you can currently find out. This is the age at which you are eligible to start collecting the full benefits to which you are entitled. It used to be 65 for everyone, but there have been changes over the years, and the table below shows the current classification:
|
birth year |
Full retirement year |
|---|---|
|
1937 and earlier |
65 |
|
1938 |
65 and 2 months |
|
1939 |
65 and 4 months |
|
1940 |
65 and 6 months |
|
1941 |
65 and 8 months |
|
1942 |
65 and 10 months |
|
1943-1954 |
66 |
|
1955 |
66 and 2 months |
|
1956 |
66 and 4 months |
|
1957 |
66 and 6 months |
|
1958 |
66 and 8 months |
|
1959 |
66 and 10 months |
|
1960 and later |
67 |
Source: Social Administration.
Nr. 3: Think about when you want to start collecting benefits
Once you know your full retirement age, you can start thinking about when you want to start reaping the benefits of Social Security – because you can start as early as age 62 and as late as age 70, and start or eventually your controls will make smaller than larger, respectively.
For each year above your full retirement age that you defer to accumulating benefits, they will grow by about 8%. So slow down from age 67 to 70, and your benefits will increase by 24%, enough to turn a $ 2500 per month check into a $ 3,100. Keep in mind, however, that starting late means you will accumulate far fewer checks than someone starting early. Indeed, those who live of average length will reap about the same overall benefits, regardless of when they start accumulating.
Still, there are good reasons to start collecting at 62, such as if you are not in good health or just need the money, and good reasons to delay until age 70, such as if your family tends to take extra long live life and you want to continue working until age 70.
The table below shows what part of your full benefits you will receive depending on when you start collecting:
|
Start collecting at: |
Full retirement age of 66 |
Full retirement age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Source: Social Administration.
No. 4: Strategize with your partner
It is also wise, if you are married, to coordinate with your partner about when each of you will reap benefits. You might both start early because you’ll be collecting two checks, but keep in mind that if one of you dies, the other only gets one check – the bigger of the two. That it may make sense for the higher earner to delay as long as possible, in order to maximize this control.
No. 5: Learn how to increase benefits
Finally, you know that there are a few more ways to increase your Social Security benefits, beyond that you start collecting late. For example, you can make sure you work for at least 35 years, because the SSA bases your benefits on your income in the 35 years you have earned the most (adjusted for inflation). Stopping after work, say, 31 years means four zeros enter the formula. If you to have worked 35 years, but now earn a lot more than you used to, on an inflation-adjusted basis, you can probably claim your benefits by working a year other than a few years, because every year with a high earnings a low- income year.
Social security checks make up about a third of the income of older Americans – and without it, millions of us would end up in poverty. Take some time to learn more about Social Security so you can make smart decisions about it.
