How To Boost Your Social Security Payment Before You Retire

Social Security

If you are like most people, you are going to be relying on your Social Security payments when you retire. In 2014, there were over 59 million Americans who were receiving Social Security benefits and a total of $863 billion was paid out. When you retire, you are eligible to that piece of the pie. Everyone is not eligible for the amount of money from Social Security. There is a formula that is used to determine your benefits and several factors that will impact your benefits. If you want to ensure that you are going to receive the maximum amount, there are a few steps that you should take while you are still working.

Make Sure That You Work For at Least 35 Years Before You Retire

After retirement, the Social Security Administration (SSA) will calculate your benefits based on your lifetime earnings. They will take your annual income, and use the years that you made the most over a period of 35 years to determine who much money you would be eligible for. If you didn’t work for a full 35 years, the SSA will add zeros for the years that you didn’t work. This can greatly reduce the amount of money that you would be eligible for after retirement.

Try to Work Until the Retirement Age Determined by the U.S. Congress

In 1983, the retirement age was 65 years old. In 2000, congress decided that the retirement age would increase to 67 years old because the average American’s health had improved and the life expectancy increased. While the law states that you can start receiving Social Security benefits at 62 years old, you will lose 30 percent of your benefits for that year. You will lose 30 percent for every year that passes until you reach the full age of 66. When you do turn 66, your benefit amount for the rest of your life would be lowered. If you are able to, you should work for as long as you can.

Don’t File a Claim Until Your Turn 70

The benefits that you receive at ages 62, 66, and 67 are not your maximum benefits. The longer you wait to file a claim, the higher your maximum benefits will be. It is not until you turn 70 years old that you maximum benefits will kick in. Each year after age 62 that you wait to file a claim, you benefit amount will go up by 8 percent each year. After you turn 70, your benefit amount will no longer go up. If you can work until you are 70 years old, or if you have a retirement fund to live off of until you turn 70, it is the best way to be eligible for your maximum payout.

Earn as Much Money as Possible

The more money that you earn during the course of your lifetime, the more money you will receive from Social Security. If you don’t make enough money and are going to get a second job, getting something off the book and tax-free may sound great at the time. Unfortunately, it won’t help you out in the future. If you are going to take on a second job, you should make sure that it is on the books and that taxes are taken out. It is the only way to ensure your maximum benefits.

Have the Higher Earning Spouse Delay Payment

If a couple is married, they need to decide which spouse will file for benefits at age 62 or the full retirement age and which one will delay claiming until they are 70 years old. When the time comes, the spouse who made the most money while they worked should be the one to delay claiming. This will allow them to earn the highest payout possible. In the end, it is the best bet for both spouses.

Claim Your Dependent Children

If you have dependent children in your home at the time that you retire, you can receive additional benefits for them. This law applies to children who are under the age of 19. It is important to claim your dependents so that you can receive the maximum benefits. Since you are still taking care of your children financially, even after you retire, you deserve additional payments to help you do so.

Maximize Your Benefits if You Pass Away

If you pass away before you spouse, and your Social Security benefits are higher than your spouse’s, they can inherit your benefits. If you want to make sure that your spouse is well taken care of after you pass away, you should wait as long as possible to file a Social Security claim. The longer you wait, the more money your surviving spouse will receive.

Try to Keep Your Social Security Taxes as Low as Possible

Your monthly payment can take a huge hit if your payments fall into a high tax bracket. Your payout can be taxed by anywhere from 50 percent to 85 percent if you fall in a certain tax bracket. To keep this from happening, you should focus on your adjusted gross income. If possible, you should distribute your funds evenly throughout the years. If there are no sudden increases or decreases, you will fall into a lower tax bracket.

Check Up on the Social Security Administration

It is a good idea to frequently visit, and download your Social Security statement. You want to make sure that the SSA is crediting you for the money that you are paying with each paycheck. A few times a year, you should look at your total Social Security payments for the year that is noted on your paycheck. If there is an error that you don’t catch, you won’t be credited for the correct amount.

Final Tips

While you may want to work as long as possible to earn the maximum benefits, you need to keep your health in mind. If you are not able to work anymore but you are forcing yourself, it can be dangerous. While the maximum payout is the goal, your health is more important. Also, it can be good to rely on half of your spouse’s benefit, however, being financially dependent on a person can be difficult. These are just a few things that you should keep in mind.

If you want to be sure that you are going to be financially secure when you retire, you should follow the tips listed above to be sure that you will earn the maximum payout.


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