There’s a good chance your Social Security benefits will constitute a large chunk of your retirement income — maybe even the bulk of it. As such, it pays to do whatever you can to increase that crucial income stream. Here are a few key moves that’ll help you do that.
1. Delay your filing
Your Social Security benefits are calculated based on your average monthly wage during your 35 highest-paid years in the workforce, adjusted for inflation. But the age at which you claim those benefits will determine how much monthly income you collect.
If you file for benefits at full retirement age (either 66, 67, or somewhere in between, depending on the year you were born), you’ll get the exact monthly benefit your earnings history entitles you to. File earlier, which you can do starting at age 62, and your monthly benefit is reduced.
You can also delay benefits past full retirement age, and in doing so, boost them by 8% a year up until age 70. As such, if your full retirement age is 67 and you hold off on taking benefits until 70, you’ll score a permanent 24% increase in those monthly payments.
2. Work longer
As just mentioned, your Social Security benefits are based on your 35 highest-paid years of earnings. But if you don’t have a full 35 years of wages under your belt, you’ll have a $0 factored into your personal benefits equation for each year there’s no income on file for you. As such, if you’re nearing the end of your career and are missing a few years of wages out of those 35, working a bit longer than initially planned will help you replace some zeros with actual earnings, thereby bringing your benefits up.
Working longer is also smart if you’re earning much more at the tail end of your career than you did earlier on. Even if you have a full 35 years of wages on file, if you replace a year of lower wages with a higher income, your monthly benefit will increase as a result.
3. Boost your earnings during your working years
Since Social Security benefits are earnings-based, the more money you make during your working years, the higher your monthly benefit in retirement stands to be. That’s why it pays to advocate for higher wages if you’re underpaid. Make a point to research salary data for your position every year or so to ensure that your earnings are on par with what the typical worker with your job brings home. If they aren’t, you can take that data to your employer and use it to build a case for a higher wage.
At the same time, keep boosting your skills on the job and going after promotions. Both are likely to result in a higher paycheck, which means higher benefits for you down the line.
4. Correct errors on your annual earnings statements
Each year, the Social Security Administration (SSA) issues workers an earnings statement. This document summarizes your yearly taxable wages and estimates your monthly Social Security benefit so you have an idea of what to expect when you retire.
But sometimes, the SSA receives erroneous wage data, and if your earnings statement one year lists a lower income than you actually made, that incorrect amount could get factored into your benefits calculation, thereby lowering the amount you receive in Social Security later on. That’s why it’s important to review your annual earnings statement and report mistakes to the SSA at once. Fixing an error could help you avoid a permanent hit on your monthly benefits.
If you’re 60 or older, you’ll get a copy of your earnings statement in the mail each year. Otherwise, you can create an account on the SSA’s website and view your earnings statement there.
The more money you get from Social Security, the more financial security you’ll buy yourself during your later years. Make these key moves, and with any luck, you’ll score a higher monthly benefit that comes in very handy during retirement.
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