4 Ways to Stretch Your Social Security Checks Further in Retirement
JThere aren’t many retirement guarantees, but if you’ve worked long enough in your younger years, you can count on monthly Social Security checks to help cover some of your bills. How far they go, however, partly depends on the decisions you make. Here are four things you can do to stretch your Social Security checks as much as possible.
1. Choose the right age to register
The amount of your Social Security checks is based on the amount you earned during your working years and at the time of your registration. You must wait until full retirement age (FRA) if you want to receive the benefits to which you are entitled based on your employment history. It’s somewhere between 66 and 67 for most people.
Registering early cuts your checks. Those who start immediately at age 62 receive only 70% of their full benefit by check if their FRA is 67, or 75% if their FRA is 66. Each month you delay benefits increases your checks slightly until you turn 70. This is when you qualify for your greatest benefit. It’s 124% of your full benefit per check if your FRA is 67, or 132% if your FRA is 66.
Choosing the right age to enroll can help you maximize your lifetime Social Security benefits. It all depends on your life expectancy. People who live to be 80 or older generally fare better if they delay benefits as long as possible, while those with shorter life expectancies are generally advised to start earlier.
But you also need to consider your financial situation. Delaying benefits until age 70 may not be feasible if you cannot afford to cover all of your retirement costs yourself. But you might be able to bump up your checks a bit by waiting an extra month or two before signing up.
2. Coordinate with your spouse
Married couples must decide when each person should register for benefits if both are eligible for full Social Security benefits. Married people may qualify for benefits based on their own work history or spousal benefits, which are up to half of their partners’ benefits to their FRA.
When both partners have earned a similar amount over their lifetime, both should try to delay benefits as long as possible if they want the greatest lifetime benefits. But if one person wins much more than the other, it is more important that the person who wins later. The lower earner can enroll early in Social Security if needed to help the couple. Then, once the higher earner has registered, the Social Security Administration will automatically switch the lower earner to a spousal benefit if they are worth more than they are already receiving.
If you’re not sure when it makes sense for each person to sign up, create “my social security” accounts and use the calculator there to help you work out how much each of you can get from the program at different ages of departure.
3. Don’t sign up until you’re retired
It’s possible to apply for Social Security while you’re still working, but it’s generally best not to if you’re under your FRA at the time, as you may run into problems with the Security Income test. social.
If you’re under your FRA for all of 2022, you’ll lose $1 from your Social Security checks for every $2 you earn over $19,560. If you reach your FRA in 2022, you will only lose $1 for every $3 you earn over $51,960 if you reach that amount before your birthday.
Money withheld due to the income test is not lost forever. Once you reach your FRA, the Social Security Administration recalculates your benefit to include money it has withheld in past years. This means that your future checks will be larger. However, they will still be smaller than they would have been had you simply delayed Social Security until you retire.
4. Apply for benefits for all household members
Although rare, other members of your household may be eligible for Social Security benefits depending on your work record, besides you and your spouse. Minor or disabled children may also be entitled to benefits, as may stepchildren, grandchildren or step-grandchildren in certain situations.
Be sure to claim benefits for all eligible household members if you want to get the most out of the program. If you’re not sure who qualifies, contact the Social Security Administration or use the Benefit Eligibility Checker.
If you’ve thought about the four factors above, you should have a solid claims strategy in place. But it doesn’t need to be frozen. Check with yourself and your household members every year or two to see if you need to make any changes to your plan. Adapting your Social Security strategy as you go will give you a clearer picture of what you can expect from the program and how much you need to save for retirement.
The $16,728 Social Security premium that most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: an easy trick could earn you up to $16,728 more…every year! Once you learn how to maximize your Social Security benefits, we believe you can retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.
The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.