13 ways to get more Social Security
There are steps you can take now to substantially increase your Social Security payments during retirement.
This post comes from Renee Morad at partner site Money Talks News.
The average monthly Social Security benefit for a retiree in 2013 is estimated at $1,261, according to the Social Security Administration. That's just $15,132 a year -- for many people, hardly enough to live on.
Hopefully when you reach retirement, you'll have a nice nest egg to offset hurdles like vanishing pensions and unpredictable stock market returns. But either way, there are certain actions you can take today to boost your Social Security payments during retirement, and they can add up to thousands of extra dollars in your golden years.
Here are 13 things you can think about today to increase your Social Security payments during retirement:
1. Work at least 35 years
Social Security benefits are calculated based on your 35 highest-earning working years. If you work fewer years, you'll have years with zero income averaged in, which will lower your payout.
2. Ask for a raise
If you experience a jump in salary, you'll likely boost your future earning potential and may see an increase in your Social Security payments down the road because, as we just explained, Social Security takes into account the 35 top-earning years of your career.
3. Take a second job
The same logic applies: If you earn more each year, you'll likely increase the amount you get in Social Security when you retire.
4. Wait until full retirement age to claim Social Security
You can begin collecting Social Security benefits as early as age 62, but you might not want to: Your benefit will be reduced by 25% for life. To get your full payment, wait until you reach full retirement age -- 66 for anyone born between 1943 and 1954. For those born from 1955 to 1959, the age gradually rises toward 67. For those born in 1960, it's 67.
5. Better yet, wait until age 70
If you can afford to wait until age 70 to claim Social Security benefits, it'll pay off. Thanks to what the Social Security Administration calls "delayed retirement credits," benefits increase 8% each year you delay tapping into Social Security -- up until age 70. So waiting until you reach 70 means about a third more income for life.
When considering this strategy, it's particularly beneficial for the higher-earning spouse in a marriage to hold out until age 70 to increase the total benefits the couple will receive throughout their lifetimes. In the event that the spouse with the higher benefit passes away, the surviving spouse will receive the higher payment.
If you took benefits early and regret the move, it might not be too late to fix it. Under limited circumstances, you may be able to repay all the benefits you received so far and restart them at a higher level based on your age. For more details, check out this page on the SSA website.
6. Use online tools
If you're unsure about the best time to claim benefits based on your individual budget, health, life expectancy, or other factors, use online resources to help you decide. A good place to start is SocialSecurity.gov/MyStatement, where you'll get your personalized statement. This estimates what your benefits will be at age 62, at full retirement age, or at age 70.
Once you get estimates for both you and, if applicable, your spouse, there are other online tools that compare your benefits under various scenarios to help you determine the best claiming strategy. Consider AARP's Social Security benefits calculator.
7. Claim spousal benefits
If you're married, you have a choice: You can either take the benefit based on your work history, or half your spouse's benefit. So if your spouse earned a lot more than you did, and has a higher benefit as a result, compare and see which will pay the most.
You can also claim Social Security benefits based on an ex-spouse's work record if you were married for at least 10 years. Doing so doesn't reduce your former spouse's check or otherwise impact him or her. In fact, he or she need never know you applied.
8. Taking early retirement? Beware of outside income
If you start taking benefits before reaching your full retirement age, employment elsewhere can reduce your Social Security checks.
For example, say you started taking Social Security in 2012 at age 62 and your full retirement age is 66. For 2012, your benefit would be reduced by $1 for every $2 you earned in gross wages or net self-employment income above $14,640.
If you reached full retirement age in 2012, you could have earned up to $38,880 prior to the month you turned 66. More than that, and your benefit would be reduced by $1 for every $3 you earned.
After you reach full retirement age, you get your full benefit no matter how much you earn.
9. Claim twice
Let's say the husband is 66 and the wife is 62. If the husband files for benefits, the wife could opt for half her husband's benefit, while still earning money and letting her benefit grow. She can drop the spousal benefit and file for benefits based on her own work record whenever she wants. If she waits until age 70, she'll have the maximum benefit using her own history.
There are lots of strategies like this to maximize Social Security. As you approach retirement age, be sure and do lots of reading. This article from Kiplinger is a good place to start.
10. Benefits for your kids
When you start collecting Social Security benefits, unmarried dependent children under age 18 may qualify to receive benefits worth up to half of your full retirement benefit amount. This can include a biological child, adopted child, stepchild or dependent grandchild. He or she may also get benefits at age 18 or 19 as a full-time student (no higher than grade 12) or 18 or older if the individual has a disability that began before age 22.
11. Plan ahead for taxes
If the sum of your adjusted gross income, nontaxable interest income, and half your 2012 Social Security benefits exceeds $34,000 -- or $44,000 for couples -- up to 85% of your benefits may be taxable.
There's not much you can do about this, but there are a few strategies that might work. For example, if you earn interest from taxable savings and don't need the income, you could transfer those savings into a tax-deferred investment, like an annuity.
12. Do your due diligence
Read your Social Security statements to be sure everything has been reported correctly. Although inaccuracies are uncommon, some scenarios, such as a name change, lend themselves to a greater chance of error.
13. Clear your debts
Your Social Security benefits are protected from most debt collections, but they can be taken for federal taxes, federal student loan balances and child support or alimony. Clearing these debts will leave your Social Security benefits untouched.
More on Money Talks News and MSN Money:
- 8 Social Security myths exposed
- 8 surprising facts about retirement
- 10 money mistakes that can ruin a marriage
- Smart Spending on the go: Get our app for Android or iPhone
- CEOs: Raise retirement age to 70
- 6 changes to Social Security in 2013
i am getting my social security this november when i turn 62 !!
i will not wait any longer
It was wrong that the government changed the age of full benefits for those who were born after 1943. When I started paying into this scam known as social security I was suppose to receive full benefits at the age of 65, but now it is almost 67. You don't change the rules mid-stream because they are to your advantage. If they wanted to change it, it should have been for those who had not started working and paying into it yet.
Now they are talking about changing medicare to age 67 also. How do they expect jobs to open up for the younger generation coming into the workforce if they have to pay thousands a year into a bottomless pit of insurance premimums?
Our government is loaded with schemes to rip off the working person and give it to the scabs who sit on their butts and do nothing. Pretty soon (if not now), it is like, Why work?
I also agree with others that SS will not be around when I come of age to collect, or they will tell me since I did what I was suppose to and put away for my retirement, I don't need it so I cannot collect.
My $0.02 worth.
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