3 Signs You Are Missing Out On Valuable Opportunities To Increase Your Social Security Benefit | Smart Change: Personal Finance

(Kailey Hagen)

Most people know that putting money into a retirement account will improve their future financial security, but not so many think about how to optimize their Social Security benefit for more retirement money. Yes, the government ultimately determines the size of your checks, but the formulas it uses to do so are in the public domain.

You can use this knowledge to earn more retirement money, but many miss out on valuable opportunities to do so. Here are three signs that you are missing out on opportunities to increase your future Social Security benefit.

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1. You haven’t worked for 35 years yet

The Social Security Administration examines your earnings in your 35 years of greatest earning, adjusted for inflation, when calculating your benefit. This is known as Average Indexed Monthly Earnings (AIME).

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You can still qualify for Social Security if you haven’t worked for 35 years, but you may not be happy with the size of your benefit. The government will add zero-income years to your calculation, and even one of them can reduce your checks by several dollars.

Working for at least 35 years helps you avoid this problem, and some people choose to work even longer. Those who work more often see their benefits increase over time. Once they are over 35, the Social Security Administration replaces some of their lower income years, often earlier in their career, with more recent, higher income years in the benefit calculation. This leads to higher monthly allowances.

2. You have not considered the implications of your reporting age

The federal government assigns everyone a full retirement age (FRA) – between 66 and 67 for today’s workers – based on the year of birth. You must wait until this age to claim the full benefit you are entitled to based on your work history. This is known as the Primary Insurance Amount (PIA).

But you can apply for benefits as early as 62, although doing so will reduce your benefits by 25% per check if your FRA is 66 or by 30% if your FRA is 67. However, people with a short life expectancy they often choose to enroll early, as do many who struggle to pay for household expenses without the help of Social Security.

Delaying benefits slowly increases your allowances over time until you reach your maximum benefit of 70. This is 124% of your PIA per month if your FRA is 67 or 132% if your FRA is 66. The Waiting for the claim could lead to a greater lifetime benefit, but this usually only works for those living to age 80 or over.

You can join anytime between the ages of 62 and 70. It is up to you to decide which starting age is most beneficial for you. But it’s wise to consider several options before making that call.

You can estimate the amount of your checks at various starting ages by creating a My Social Security account. Multiply your monthly allowance by 12 to get your estimated annual allowance, then multiply it by the number of years you plan to apply for to get your estimated lifetime allowance. For example, a $ 2,000 monthly subsidy required for 20 years would give you a lifetime benefit of $ 480,000. Do this for different ages until you find the one that gives you the most benefit overall.

3. You have not talked about your decision with your family

Single adults with no dependents can choose the age of applying for social security based on what’s best for them on their own. But married couples and older people who care for minor or disabled children need to think about how their decision will affect other members of their family.

Spouses and children may be eligible to claim the benefits on your employment record, but they cannot do so until you sign up for the benefits. This can affect when you choose to sign up. Applying early may result in smaller allowances for you personally, but if you also have a spouse and minor children who bring benefits to the family, you may end up with more money overall.

Sit down with all interested family members to discuss when each eligible family member will claim benefits. If you have questions about who in your family is eligible, contact the Social Security Administration for clarification.

These tips may not all apply to you, but if you see any opportunities you missed above, take the time to review the tips here and make any necessary adjustments to maximize your benefits. Review your claim strategy annually when you also review your retirement plan. If a major life or financial change occurs, you may want to rethink when applying for benefits.

The $ 18,984 Social Security Bonus that most retirees completely overlook

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