Your 50s are a pivotal time in the grand scheme of retirement -- mostly because they might be the last full decade you actually spend in the workforce. And since retirement and Social Security go hand in hand, it pays to focus on the latter in the years leading up to the former. Here are three key Social Security moves to aim for during your 50s that will eventually help you make the most of your benefits.
1. Review your earnings record for accuracy
Your Social Security earnings record is loaded with information about your work history, and that includes salary data. Now if you have a bunch of these statements sitting around in a file somewhere, you may not have paid much attention to them. But your 50s are the perfect time to dig out that paperwork and start going through it. The reason? If any of those statements contain errors, you could wind up with less money out of Social Security in retirement.
Your Social Security benefits are calculated based on what you earned during your 35 highest working years. So if your salary for, say, three years, is listed at several thousand dollars lower than what it really was, that's a mistake you'll want to correct. Otherwise, you could end up getting shorted on your benefits when the time comes to collect them.
While the Social Security Administration (SSA) used to mail out its statements, that practice no longer exists for workers under 60 -- so if you want to get at that data going forward, you'll need to be proactive. Thankfully, accessing your earnings record online is easy. All you need to do is create an account on the SSA website, review your documents, and report any errors you spot. This might mean providing copies of old W-2s or paystubs to back up your claims.
2. Boost your salary at work
The more money you earn on the job, the more you'll have available to not only cover your living expenses at present, but sock away for the future. But boosting your income can do more than just put extra cash in your pocket; it can also increase your Social Security benefits.
As mentioned above, your benefits are based on what you made during your 35 highest years of earnings. Boost your salary in your 50s, and your benefits stand to go up as well.
Of course, negotiating a raise isn't easy, but if you go in strategically, you'll have a better chance of success. To start, do some research to find out whether you're being compensated fairly based on your job title, responsibilities, and geographic region (keeping in mind that workers in big cities can typically demand more than those with similar roles living in less high-profile areas). You can use sites like Glassdoor and Salary.com to access this data.
From there, you'll want to present that information to your manager, along with hard numbers proving what a valuable asset you've been to the company. For example, if your efforts in implementing a new accounting system saved your company $40,000 and 1,000 man-hours this past quarter, bring that to your boss' attention. The more data you present in your favor, the more likely you are to get the boost you're after.
3. Start developing a strategy for claiming benefits
There's no saying you absolutely need to decide when to claim Social Security in your 50s. What you should do, however, is read up on how the program works and understand the ramifications of filing for benefits at various ages.
For example, if you start taking benefits at 62, which is the earliest age you're allowed to file, you'll get access to your money sooner, but you'll reduce your benefits by virtue of filing early. On the other hand, if you wait until full retirement age, which, for today's older workers, is 66, 67, or somewhere in between, you'll get to collect the full amount you're entitled to based on your earnings record. There's also the option to delay your benefits past full retirement age, and snag an automatic yearly 8% boost on those payments in the process. Though this incentive runs out at age 70, if your full retirement age is 67 and you plan financially to hold off until then, you'll wind up with a 24% boost in total.
Now you should know that there's no right or wrong age to file for benefits, but it is critical to put some thought into your filing strategy ahead of time. For example, waiting until 70 to claim Social Security may not end up being an option if you don't save for it in advance, so start thinking about what will ultimately make the most sense for you and your family.
Once you reach your 50s, retirement becomes less of a dream and more of an impending reality. Take the time to focus on Social Security, and you'll be thankful for it later on.
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