It’s a fact – trying to figure out Social Security benefits is hard. But it doesn’t have to be! With just a little bit of strategy and a dash of know-how, you can ensure your golden years are just that – golden. Here are 12 tips for anyone out there who’s looking to squeeze every penny out of Social Security. You might be surprised at just how many ways you can save!
1. Delay, Delay, Delay
Think about claiming your Social Security benefits like a fine wine. The longer you let it age, the better it will finally taste. Claiming benefits before your full retirement age (FRA) means you’re leaving money on the table. Wait until you’re 70, and you’ll be rolling in an extra 8% per year. Who doesn’t love a good bonus?
2. Work a Little Longer
Likewise, sticking it out in the workforce for a couple more years can beef up your benefits. Social Security calculates your payout based on your 35 highest-earning years. So, if you’re earning more now than you did back in the disco era, working a bit longer can replace those lower-earning years. Cha-ching!
3. Get Spousal Savvy
If you and your better half are both eligible for Social Security, play the system like it should be played. One of you can claim benefits based on the other’s record for a while, then switch to your own higher benefit later. This way, you can get more money while also using both of your earnings.
4. Don’t Forget the Ex
However, if you’re divorced, don’t worry – an ex-spouse’s earnings record could be your secret weapon. If the marriage lasted at least ten years, you might get up to 50% of your ex’s benefit without them ever knowing. Talk about a parting gift! It really depends on how things ended, so speak to a lawyer to get things sorted out.
5. Avoid the Tax Trap
Believe it or not, Uncle Sam can tax up to 85% of your Social Security if you’re not careful. Keep your income in check, and perhaps try converting to a Roth IRA. You should also be careful when withdrawing from retirement accounts if you want to keep the taxman at bay. Of course, we don’t support breaking the law – only do what is legal!
6. Check for Errors
Your Social Security statement is not immune to the occasional mistake. To fight this, you need to regularly review your earnings so that you’re getting credit for every penny you’ve earned. Spot a mistake? Getting it corrected could mean a nicer chunk of change come retirement and far less of a headache.
7. Max Out the Family Benefits
If you have a few dependents, you might be able to increase your household’s Social Security take. Family benefits can top out at up to 180% of your full retirement benefit, so make sure all eligible family members get in on the action. Who knew having a big family could be so profitable?
8. Don’t Earn Too Much, Too Soon
For those still punching the clock and yet to reach their Full Retirement Age (FRA), there’s a cap on how much you can earn before it starts eating into your Social Security benefits. For every two dollars you earn over the threshold, the government withholds one dollar of your benefits is withheld. Keep this in mind if you’re looking to supplement your income before reaching FRA.
9. Coordinate With Your Boo
When it comes to Social Security, two heads are often better than one. Couples have the advantage of being able to plan when and how they claim their benefits to maximize their combined income in retirement. One of you could claim benefits early while the other waits, or you could delay claims to get a bigger payout. Seriously – it pays to be married!
10. Consider Your Longevity
Deciding when to claim Social Security benefits means thinking about your health and family history of longevity. If you’re blessed with the potential for a longer-than-average life span, delaying your benefits can be a wise move. Waiting beyond your Full Retirement Age allows your monthly benefit amount to increase, which is essentially a larger safety net as you age.
11. Invest Early Retirement Benefits Wisely
If you don’t need your Social Security benefits immediately upon early retirement, consider investing them instead of spending them. This can significantly increase their value over time, especially if you’re looking at a long-term horizon like ten years or more. You never know, you might drastically increase your financial security for your later years!
12. Seek Professional Help
Of course, the most important thing of all is to get a financial advisor to give you more clarity and direction over your Social Security Benefits. These professionals can offer personalized advice based on your financial situation. This way, you can receive the maximum benefit possible, tailored to your unique needs and goals.
Beyond professional financial advice, it’s equally crucial for seniors to be fully aware of all government-provided benefits and programs available to them. These can encompass a wide range of support, from financial assistance and healthcare to housing and mobility aids, often varying significantly by location. For those residing in Canada, understanding the comprehensive benefits for seniors in Canada can significantly enhance their quality of life and financial security. Accessing such information ensures individuals can leverage all resources designed to support their independence and well-being in their later years.
Making the Most
There you have it – 12 smart tips to help you make the most of your Social Security benefits. With a little bit of planning, you can make sure that your retirement years are as comfortable and prosperous as they should be. Remember, you don’t want to just get by – you want to live it up. So go ahead and make your golden years shine!
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
Leave a Reply