While next year retirees will see the biggest bump in their Social Security checks since 2012, experts have cautioned it still won’t be enough to keep up with rising costs.
The AARP and the Alliance for Retired Americans said the 2.8 percent jump in benefits would not be enough to keep up with increasing expenses related to health care, housing and prescription drugs, presenting a challenge to the many people who rely on the checks to live on.
Don’t want to worry about a potential Social Security shortfall affecting your finances? There are some steps you can take now to bolster your financial future through maximizing your benefits.
While each strategy will be different based on individual goals and circumstances, waiting to claim your benefits until the age of 70 will boost the amount received each month.
In fact, that strategy could add up to a lifetime income stream up to 32 percent higher compared with those who don’t wait until 70 to claim, according to John Iammarino, the principal and founder of Securus Financial. As an added bonus, each annual cost-of-living adjustment (COLA) increase will tack a larger amount onto monthly checks.
Iammarino also recommends those born before Jan. 2, 1954, consider filing for spousal benefits at full retirement age, while delaying their own worker’s benefit. This strategy could also increase the worker’s benefit by as much as 32 percent, he said.
However, waiting to claim could result in some financial stress for older Americans. But there are a number of ways to make sure your finances remain healthy in the interim, including downsizing properties, diversifying your investments or getting a part-time job. Once you begin claiming your benefits, supplemental income can trigger higher taxes.
It can be helpful to consult a financial professional, considering there are 567 different ways a married couple can collect Social Security, according to Bryan Bibbo, an accredited investment fiduciary with the JL Smith Group.
The Social Security Administration announced earlier this month that the cost-of-living adjustment for the coming year will boost the average beneficiary’s check by about $39 per month.
It will raise the current maximum benefit collected by someone who retires at full retirement age – age 66 for people born in 1943 through 1954 – by about $78 per month.
About 67 million Social Security and Supplemental Security Income beneficiaries will be impacted.