Most Americans aren’t even aware they have any control over that aspect of their finances -- but they do. And it’s a lot simpler to take control than you might think. This article will show you how to help maximize your Social Security payments.
Wait as Long as You Can to Collect
You could start taking Social Security checks at the age of 62, but is that a good idea? Not really. In fact, it could result in a 30 percent reduction in your payments.
If you’ve planned your retirement well, you won’t need to start drawing checks from Social Security right away. If waiting another eight years won’t kill you, do it, because that wait will give you a significant boost in the income you’re drawing from Social Security.
People have more diversified retirement plans than ever, so the longer you can depend on other parts of your nest egg, the more you’ll maximize Social Security payments.
By delaying when you collect payments, you earn the right to "delayed retirement benefits," which amount to an additional 8 percent annually for each year that you wait beyond 62, up until you’re 70. Since people are living longer, roughly speaking it makes sense to wait as long as you can to reap the benefits on the backend.
Even if you can’t wait to start collecting your own Social Security checks, perhaps your spouse can. Run the numbers on one of you delaying collection. If just one of you is able to wait, that’s better than nothing.
Make More Money Now
Social Security payments are calculated based on the 35 most financially successful years of your life. Earning more now is a double whammy, because it means your Social Security payments will be bigger later on.
What’s more, when you’re earning more, you should be plowing more money into your other retirement instruments. This, in turn, frees you up from relying on Social Security when you enter retirement, making it easier to wait until that magical year of 70, when your payments go way up.
Reduce Earnings While You’re Drawing Payments
There are strict limits on salary while you’re collecting Social Security checks. After you turn 63, you can make up to $14,460 before your payments take a hit. After that, for every $2 you make above the limit, Uncle Sam is going to hold back $1 in Social Security.
You also need to keep your overall taxable income down. Once your adjusted gross income, nontaxable income and Social Security benefits total up to $34,000 ($44,000 for couples), as much as 85 percent of your Social Security benefits could be taxable. That can quickly drop your earnings from significant to negligible.
Don’t Forget Spousal Benefits
Spousal benefits are important to remember when filing for Social Security.
The primary wage earner has to file for retirement first. If you file for spousal benefits, you should wait until you reach the full retirement age of 66 or 67.
Spousal benefits can amount to as much as half of your total retirement payment every month. What’s more, with a file and suspend, where the primary wage earner files for retirement, then suspends Social Security payments until reaching 70, while the non-primary earner files for spousal benefits, you can give your Social Security checks yet another quick boost.
You can increase your Social Security payments just by paying attention to a few very small points. Do that, and you’ll be able to receive a much bigger payment back from what you’ve been paying all these years.