Maximizing your Social Security benefits can significantly enhance your retirement income. Here are three essential strategies to help you increase your Social Security check and ensure financial stability in your golden years.
Your Social Security Benefits Aren't Always Set in Stone
Retirement can be financially daunting. Six in ten retirees view their Social Security check as a crucial income source. Many seniors are grappling with rising living costs that erode purchasing power. Since 2010, retirees have experienced a 20% loss in purchasing ability due to inflation and mounting expenses. Fortunately, there are methods to boost your benefits beyond the typical annual cost-of-living adjustments (COLA).
1. Keep Working in Your 60s
Continuing to work or rejoining the workforce in your 60s is a powerful way to maximize Social Security benefits. The Social Security Administration (SSA) determines your monthly benefit based on your earnings history. While earlier earnings can be adjusted for inflation, these adjustments stop after age 60.
Increasing your earnings during your 60s can elevate your average wage, leading to a larger Social Security check. The SSA recalculates your benefits each January based on the previous year's earnings. If your current salary elevates your average wage calculation, the results will reflect positively in your monthly payments.
Consider potential challenges. If you haven't reached your full retirement age (FRA) and your income exceeds a specific cap (set at $23,400 for 2025), the SSA will deduct some benefits. For every $2 over this threshold, $1 will be withheld. However, for those nearing FRA, the limit rises to $62,160, with a less severe penalty of $1 withheld for every $3 earned over that amount. Any withheld benefits are restored once you reach your FRA, often resulting in increased future monthly checks.
2. Hit the Undo Button
Claiming Social Security benefits early doesn’t have to be a lifelong choice. It’s possible to delay those benefits, leading to a larger monthly check in the future. One avenue is withdrawing your Social Security application within the first 12 months of claiming. This requires repayment of any benefits received, a challenge for some.
Alternatively, suspending your benefits post-FRA is a viable strategy. By suspending these benefits until age 70, you accrue credits at a rate of two-thirds of your prior monthly amount for every month you pause. Many seniors have seen their benefits rise by up to 24% by delaying until age 70. If investments performed well early in retirement, this strategy allows for greater financial freedom later.
3. Claim Benefits Based on Your Ex-Spouse’s Earnings
The unwritten rules of Social Security can favor divorced individuals seeking to boost their financial situation. If your marriage lasted at least 10 years and you are currently single, you may qualify for benefits based on your ex-spouse’s earnings without impacting their benefits. This lets you claim a benefit of up to half of their primary insurance amount (what they would get at full retirement age), while also potentially receiving a higher benefit from your earnings history.
In cases where your ex-spouse has passed away, you may qualify for survivor benefits as long as you did not remarry before turning 60. Survivor benefits are significant, based on what your ex accessed before their passing or their primary insurance amount if they hadn’t claimed yet, ensuring you don't miss out on essential financial resources. It's critical to inform the SSA of your marital circumstances to take full advantage of these benefits.
The Overlooked Social Security Bonus
Numerous retirees may miss opportunities to increase their income significantly. Exploring strategies to increase your Social Security check through lesser-known benefits can provide valuable financial security during retirement. For instance, individuals can unlock an additional $22,924 annually simply by applying particular strategies effectively. Learning how to entirely maximize your Social Security benefits may substantially enhance your income, leading to a more comfortable retirement.
Proactive measures today can yield a more financially stable future. Whether you opt to keep working in your 60s, delve into withdrawal or suspension strategies, or access benefits linked to your ex-spouse’s earnings, these techniques can lead to higher monthly benefit amounts and improved financial security. Evaluating each option thoroughly and consulting a financial advisor or using a Social Security calculator to understand your circumstances can lead to informed decisions for a prosperous retirement journey.