Are you worried that your Social Security benefits won’t be enough to sustain you during retirement? Fortunately, there are several ways to increase your benefits before you retire. One way is to delay your retirement age.
Additionally, if you have gaps in your work history, consider working part-time or taking on freelance work to fill those gaps and increase your overall earnings.
Other than the obvious ways, how do these methods work? Here’s how.
Understand Social Security Benefits
To understand how your Social Security benefits are calculated, you need to know your Average Indexed Monthly Earnings (AIME). This is the average of your highest 35 years of earnings, adjusted for inflation.
Once you have your AIME, the Social Security Administration (SSA) applies a formula to determine your Primary Insurance Amount (PIA), which is the amount you would receive if you retired at your full retirement age (FRA).
Your FRA depends on your birth year, but it is between 66 and 67 for most people.
Factors That Affect Social Security Benefits
Several factors can affect your Social Security benefits, including your work history, earnings, and age. For example, if you have not worked for at least ten years, you may not be eligible for Social Security benefits.
Your earnings history also plays a role in determining your benefits, as the SSA uses your highest 35 years of earnings to calculate your AIME. Additionally, the age at which you start receiving benefits can impact the amount you receive.
If you start receiving benefits before your FRA, your benefits will be reduced, and if you delay receiving benefits until after your FRA, your benefits will increase.
By utilizing these strategies, you can increase your Social Security benefits and ensure a more comfortable retirement.
Delaying Retirement
One way to increase your Social Security benefits is to delay retirement. By delaying your retirement age, you can increase your monthly benefit amount by up to 8% per year until age 70. This can result in a significant increase in your monthly benefit amount over time.
Maximizing Your Earnings
Another way to increase your Social Security benefits is to maximize your earnings. Social Security benefits are based on your highest 35 years of earnings, so it’s important to work as long as possible and earn as much as you can during those years.
Consider taking on additional work or seeking a higher-paying job to increase your earnings.
Spousal Benefits
If you are married, you may be eligible for spousal benefits. Spousal benefits are based on your spouse’s earnings record and can be up to 50% of their benefit amount. If you are eligible for both spousal benefits and your own benefits, you can choose to receive the higher of the two.
Survivor Benefits
If your spouse passes away, you may be eligible for survivor benefits. Survivor benefits are based on your spouse’s earnings record and can be up to 100% of their benefit amount. To be eligible, you must be at least 60 years old (50 if disabled) and have been married to your spouse for at least nine months.
Divorced Spouse Benefits
If you are divorced, you may still be eligible for spousal or survivor benefits based on your ex-spouse’s earnings record. To be eligible, you must have been married for at least ten years, be at least 62 years old, and not have remarried.
You can receive up to 50% of your ex-spouse’s benefit amount for spousal benefits and up to 100% for survivor benefits.
Other Considerations
Consider these considerations for other options to earn more.
Working While Receiving Benefits
If you decide to work while receiving Social Security benefits, your earnings may affect the amount of benefits you receive. If you are under full retirement age for the entire year, $1 in benefits will be deducted for every $2 you earn above the annual limit.
In the year you reach full retirement age, $1 in benefits will be deducted for every $3 you earn above a different limit. Once you reach full retirement age, you can work and earn as much as you want without affecting your benefits.
If your combined income is more than $34,000, up to 85% of your benefits may be taxable. If you file a joint return, the income thresholds are higher.
Means-Tested Benefits
Receiving Social Security benefits may affect your eligibility for other means-tested benefits, such as Medicaid and Supplemental Security Income (SSI).
These benefits are based on your income and resources, and receiving Social Security benefits may increase your income and resources to the point where you are no longer eligible for these programs.
In conclusion, increasing your Social Security benefits before retirement is a smart move that can help you secure a more comfortable retirement. By following the tips outlined in this article, you can take control of your retirement planning and maximize your Social Security benefits.
The amount you receive is based on your earnings history, so it’s important to ensure your earnings are accurately reported. You can also request a Social Security statement to be mailed to you.
Can I increase my Social Security benefits if I continue working after retirement age?
Is it possible to receive Social Security benefits while still working?
Yes, you can receive Social Security benefits while still working. However, if you haven’t reached full retirement age, your benefits may be reduced if you earn over a certain amount. Once you reach full retirement age, there is no limit on how much you can earn while receiving benefits.
Can I delay receiving Social Security benefits to increase my monthly payments?
Yes, you can delay receiving Social Security benefits to increase your monthly payments. If you delay receiving benefits until after your full retirement age, your benefit amount will increase by a certain percentage for each year you delay. This can result in a significant increase in your monthly benefit amount.
