3 Social Security Secrets for Even Bigger Checks

(Sam Swenson, CFA, CPA)

When it comes to blocking a higher Social Security check, learning the ground rules is a productive first step. If you want to have a higher minimum spend in retirement, earning more and working longer are the key behaviors to focus on.

Only a small minority of workers reach the feat of locking in the maximum Social Security payment of $4,194 a month. Perhaps a more realistic goal is to focus on factors you can control immediately.

Below, we’ll look at three ways to get a higher monthly Social Security benefit in retirement.

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1. Earn more

The social security system works much like an insurance company: you pay “premiums” in the form of payroll tax during your working career, and collect a retirement benefit amount that matches the amount you paid. The more you pay into the system, the more you can expect to receive when you claim benefits upon retirement. Simple.

The Social Security Administration (SSA) taxes employee earnings at a rate of 6.2%, up to a maximum wage base of $147,000 in 2022 (soon to rise to $160,200 in 2023). Any amount you earn up to this amount is taxed accordingly, so the more you earn, the more you’ll pay into the system. To the extent that you can earn more, you will be rewarded with a higher monthly allowance in retirement.

2. Work longer

The SSA considers your entire employment history when determining your primary insurance amount (PIA). More specifically, consider your 35-year-old with the highest earnings. If you’ve recorded zero income years at any point in your career, those zeros will reduce your calculation. If you don’t have 35 years of work to show yet, you might want to think about working until you do. This ensures a more robust income stream when it comes time to collect your benefits.

To see where you currently stand, it’s a good idea to log into your Social Security account through the Social Security Administration website to see if you have zero income years as part of your primary insurance calculation. If you do, depending on how tolerable your current job situation is, it can make a lot of sense to stay in your job a little longer to lock in a higher spending threshold in your senior years.

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3. Marital benefits

It might seem obvious, but coordinating benefits with your spouse is an effective way to get more out of Social Security. If you were the spouse with a lower income during your career or the stay-at-home spouse, you would be eligible to collect a payment of up to 50% of your spouse’s benefits, assuming your spouse has started receiving retirement benefits.

If you’re eligible for Social Security benefits based on your earnings record, you can start collecting them as early as age 62. Once your spouse begins receiving monthly retirement benefits, you will get a potential increase from your spouse’s benefits if they exceed your retirement benefit.

You’ll only get the full 50% if you’ve reached full retirement age, which for those currently aged 60 ranges from 66 to 67. Interestingly, spousal benefits also apply to ex-spouses you’ve been married to at least 10 years. years.

Plan your social security strategy

Much of what determines how much you will receive in retirement happens long before you make your claim. Earning more and working longer are the two keys to receiving more benefits. Coordinating with your spouse is another way to maximize total dollars received.

Take some time to consider all factors, both financial and non-financial, and develop a Social Security strategy with your family. If you’re having trouble, don’t hesitate to contact a qualified financial planner for objective advice.

The $18,984 Social Security bonus 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 ensure a rise in retirement income. For example: One simple trick could make you up to $18,984 more… every year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

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