How to Maximize Your Social Security Benefits

Written by , October 26, 2011

How to Maximize Your Social Security BenefitsIt’s certainly become a hot political topic in recent years, and some people question the long-term stability of the program, but many Americans still depend upon Social Security as a significant source – and sometimes the only source – of income during their retirement years. Despite all the recent discussions, the Social Security program is still a cornerstone of the retirement system in the United States.

It’s therefore important for Social Security recipients to maximize the amount that they receive with each of their monthly Social Security checks. Fortunately, there are some factors that are within your control.

Here is some information and advice on how to maximize your Social Security benefits.

  • Maximize Your Earning. Social Security benefits are calculated in large part by looking at the income that a taxpayer had (and paid Social Security tax on) during their working years. There is a cap on the amount of benefits that any individual can receive, but a person must make that certain amount of income (and pay a certain amount of Social Security tax) in order to reach this maximum amount.
  • Wait Until Full Retirement Age Before Taking Benefits. This might be the most important piece of advice to anyone looking to maximize their Social Security benefits. An individual’s monthly Social Security check will depend primarily on when they were born, and whether they wait until their “full retirement age” before electing to start receiving benefits. Full retirement age ranges from age 65 (for individuals born in 1937 or before) up to age 67 (for individuals born in 1960 or later). An individual may elect to retire at age 62, but if they do then they will only receive a fraction of the benefit that they would have if they had instead waited until their full retirement age.
  • Wait Even Longer if Possible. Even though the full retirement age is between 65 and 67, if you can wait even longer (up to age 70) before starting to take your Social Security benefits, you’ll receive more than 100% of the standard benefit for retiring at the full retirement age.
  • Consider Your Health. Of course, any decision on how long to wait before starting to receive your Social Security benefits must take your health into account. If you are in good health, then it will likely be easier to wait until your full retirement age.
  • Plan Together With Your Spouse. There are a number of different rules that apply to Social Security benefits for spouses. For example, a spouse is entitled to receive Social Security benefits of up to 50% of their spouse’s benefit if that amount is greater than what they would receive based on their own work history. (To receive the full 50%, the spouse must wait until they are full retirement age.) If a couple has been married for at least 10 years, but later divorces, the lower earning spouse can still claim this benefit, and doing so has no impact whatsoever on the higher earning spouse is entitlement to benefits.
  • The best way to secure your own retirement is to make sure you have enough savings that you don’t need to rely exclusively on Social Security. But if Social Security does represent an important part of your retirement plan, make sure to take all necessary steps to maximize the benefits you receive.

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