The average Social Security retirement check was recently $1,417, and the maximum check topped out at $3,698. That's a big difference, and if you'd like your own Social Security benefits to be closer to the latter than the former, read on -- because there are ways to get more out of the program.
Below are three smart Social Security moves you should keep in mind as you plan for your future financial security.
No. 1: Set up a "my Social Security" account
First off, no matter how close you are to retirement, go to the Social Security website and set up a "my Social Security" account. By doing so, you can find out what you can expect to receive from Social Security in the future based on the records of your earnings. You can do much more with the account, too, such as change your address, review the Social Security Administration (SSA) record of your past earnings to make sure they're correct, check the status of your application for benefits, request a replacement Social Security card (if you meet certain criteria), request a replacement Medicare card, start or change the direct depositing of your benefit payments, and get a replacement SSA-1099 or SSA-1042S form for tax purposes.
Another benefit of setting up your account with the SSA now is that you might be doing it before an identity thief does. Fraudsters opening accounts in other people's names is an increasingly common scam and it can cause a lot of headaches for you if you fall victim. So set up that account now.
While you're at it, review the SSA's record of your income and taxes paid into the Social Security system, to make sure it's correct. If it's not, get any errors fixed -- as that can boost your future benefits.
Once you have a rough idea of how much to expect from Social Security, you'll be better able to factor that into your retirement plan.
No. 2: Maximize your benefits
Next, know that whatever your estimated future benefits are, there's a good chance you can increase them. There are many ways to increase your Social Security benefits.
For example, simply delaying starting to collect your benefits will increase them. You can start collecting your benefits as early as age 62 and as late as age 70. For every year beyond your full retirement age that you delay starting to receive benefits, you'll increase their value by about 8% -- until age 70. So delaying from age 67 to 70 can make your checks about 24% fatter -- enough to turn a $2,000 check into a $2,480 one.
Of course, if you start collecting early, your benefit checks will be smaller -- but don't dismiss the possibility of collecting early. Yes, the checks will be smaller, but you'll get many more of them. For many people, if not most, it can actually be best to start collecting at age 62.
The table below shows the approximate percentage of the full Social Security benefits you'll receive if you start collecting at various ages. So if your full retirement age is 67 and you start collecting at, say, age 64, you'll receive 80% of the amount you'd have gotten if you had started at 67.
Another way to boost your benefits is to work at least 35 years. The formula used to compute your benefits is based on your earnings in the 35 years in which you earned the most money (adjusted for inflation). If you only earned income in 28 years, the formula will be incorporating seven zeros.
Aim to have as many high-earning years as possible, too. If you're currently earning much more than you have in the past (on an inflation-adjusted basis), even if you've already worked 35 years, you might consider working for another year or two, as each high-earning year will kick out a low-earning year, boosting your benefits.
Married couples have more options when it comes to collecting Social Security benefits than single people do, such as starting to collect the benefits of the spouse with the lower lifetime earnings record on time or early while delaying starting to collect the benefits of the higher-earning spouse. That way, the couple gets some income earlier, and when the higher earner hits 70, they can collect extra-large checks.
Also, should that higher-earning spouse die first, the spouse with the smaller earnings history can collect those bigger benefit checks, as widows and widowers can choose to receive 100% of their late spouse's benefit instead of their own. The survivor benefit is not available to those who remarry before age 60, but it is if you're at least 60 and were married for at least 10 years.
No. 3: Keep up with developments in Washington
Finally, it's important to keep an eye on Social Security-related developments in Washington because many of our representatives are actively looking to change Social Security. It does need some changes, but they can be changes that strengthen it and perhaps boost benefits, or they can be changes that end up giving retirees less money overall. Some are even looking to privatize Social Security.
Be informed regarding proposed changes to Social Security. And whether you like or hate them, be sure to let your representatives in Washington know your thoughts.
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