Maximizing your Social Security retirement benefits can significantly impact your financial security in your golden years.
Many retirees find themselves struggling with lower-than-expected benefits, especially in the face of rising inflation and living costs.
However, by understanding how the Social Security Administration (SSA) calculates benefits, you can increase your monthly payments by as much as $654.
Early Retirement vs. Full Retirement Age
One of the most important decisions you’ll make regarding Social Security is when to start collecting benefits. While early retirement at age 62 is tempting, it comes with a significant drawback: a reduction of up to 30% in your monthly benefits.
For example, if your estimated benefit at 62 is $1,465, opting to delay your benefits until the Full Retirement Age (FRA) of 67 can boost your monthly check by $654, raising it to $2,119.
Why Waiting Until 67 Pays Off
- Full Retirement Age: For those born in 1960 or later, FRA is 67. If you claim Social Security at this age, you receive 100% of your entitled benefits.
- Increase in Monthly Benefits: By waiting until 67, you avoid the penalty for early retirement and secure the full amount of your calculated benefits.
- Example Calculation: If your benefit at 62 is $1,465, filing at 67 could increase it by approximately $654, resulting in a monthly benefit of $2,119.
Checking Your Estimate at 62
To make an informed decision, it’s crucial to know your estimated benefits at different ages. The SSA provides a personalized estimate that you can easily access online. Here’s how to check your estimate:
- Create a my Social Security Account: Visit the SSA website and set up an account if you haven’t already.
- Download Your Statement: Once logged in, download your Social Security Statement. This document will show your estimated benefits at ages 62, 67, and 70.
This tool helps you compare your potential benefits and decide whether it’s worth waiting to claim your Social Security.
Bonus Tips for Maximizing Social Security Benefits
Maximizing your Social Security benefits doesn’t just depend on when you file; your entire work history and earnings also play a significant role.
Here are some strategies to help you get the most out of your benefits:
- Work for at Least 35 Years: Social Security benefits are calculated based on your 35 highest-earning years. If you work fewer than 35 years, zeros are factored into the calculation, lowering your benefits.
- Ensure Jobs Are Covered by Social Security: Make sure your jobs are covered by Social Security to ensure every year counts towards your benefits.
- Verify Your Earnings Record: Regularly check that your employer is reporting your earnings accurately to the SSA. Errors in your work history could lead to lower benefits.
- Delay Retirement If Possible: If you are healthy, enjoy your work, and can afford to wait, consider delaying your retirement until age 70. Doing so increases your monthly benefits by about 8% per year after reaching your FRA, up to a maximum increase of 24%.
The Impact of Delaying Beyond Full Retirement Age
If you’re in good health and can continue working, delaying your Social Security benefits until age 70 offers an even larger boost. For each year you delay past FRA, your benefits increase by approximately 8%. This delay could mean an extra 24% on top of what you would receive at 67.
For example, if your benefit at 67 is $2,119, waiting until 70 could increase your monthly payment to $2,628—an additional $509 per month.
Deciding when to file for Social Security is one of the most significant financial decisions you’ll make in retirement. By waiting until 67, you can secure an additional $654 per month, substantially increasing your financial stability.
For those who can afford to wait even longer, delaying until 70 offers the maximum benefit, ensuring you receive the highest possible Social Security payments for the rest of your life.
FAQs
How much more will I get if I delay Social Security until 67?
If your estimated benefit at 62 is $1,465, delaying until 67 could increase your monthly benefit by $654, totaling $2,119.
What is Full Retirement Age (FRA)?
FRA is the age at which you can claim full Social Security benefits, which is 67 for those born in 1960 or later.
How do I check my estimated Social Security benefits?
You can check your estimate by creating a my Social Security account and downloading your personalized Social Security Statement.
Is it worth delaying Social Security benefits until 70?
Delaying benefits until 70 increases your monthly payment by about 8% per year after FRA, resulting in a potential 24% increase.
What factors can affect my Social Security benefits?
Factors include your work history, earnings record, age at retirement, and whether you worked for jobs covered by Social Security.
