Some people say they don’t count on Social Security when they retire. It’s a good idea when planning your retirement expenses to consider any income from the federal program as a bonus. However, even in the worst-case scenario, Social Security will still be able to pay most scheduled benefits for a long time to come.
It’s always a good idea to think about how to maximize your retirement income, including how much you’ll receive from Social Security. Here’s the easiest thing you can do to increase your benefits.
Put time on your side
The Rolling Stones once sang that “time is on my side”. These words can certainly be true when it comes to social security. You can save time on your own by thinking carefully about when you apply for benefits.
Many Americans choose to claim Social Security benefits at age 62. However, this comes at a high cost. Your monthly benefit will be about 30% lower if you start collecting Social Security at age 62 than if you waited until full retirement age of 67.
If you really want to maximize your Social Security benefits, wait a few more years. The current maximum monthly benefit for those retiring at full retirement age of 67 is $3,627. But wait till 70 increases the maximum to $4,555.
Most people do not receive these maximum amounts. However, the longer you wait to file your Social Security claim (at least until you are 70), the higher your benefits will be. Delaying puts time on your side.
When waiting is not the best strategy
Waiting is the easiest approach to increasing your Social Security benefits. However, it’s not always the easiest strategy – and it’s not always the best.
Sometimes waiting until age 70 to file for Social Security benefits is not an option. You may have to retire early due to health issues or lose your job and be forced to retire early if you cannot find another job.
Because of these possibilities, it is wise to be prepared to apply for Social Security benefits sooner, even if you prefer not to. This means that you need to save as much as possible for retirement long before you are ready to retire.
Could filing for Social Security benefits early even be financially advantageous? In some cases, yes. For example, if you don’t expect to live to age 80, your lifetime benefits could be higher by starting to collect Social Security at age 62 instead of waiting until your full retirement age or 70 years.
There are also other ways to increase your Social Security benefits instead of waiting until your full retirement age or until you turn 70 to file your claim. An important step is to make sure you have at least 35 years of earnings that count towards your Social Security benefits. For example, if you only have 33 years of income at age 62, working another two years before filing your application will increase the amount you will receive.
Another alternative is to earn as much money as possible during your working years. If your employer has a higher paying position that you are qualified for, go for it. If you can’t get a raise from your current employer, look elsewhere for a job that pays better. Admittedly, this option is easier said than done. But it is worth pursuing.
Ultimately, however, the easiest thing you can do to receive higher Social Security benefits when you retire is to delay when you start collecting those benefits. As the old saying goes, “Good things come to those who wait.”