For most retirees, Social Security makes up a meaningful portion of their income. If you’re nervous about the prospect of living on a fixed income for the rest of your life, take these steps to ensure that your reap as much from Social Security as possible.
Check your work credits. Your benefits will be based upon your earnings history, so it makes sense to double check with your Social Security representative to make sure your history is accurate. Ask for a copy of it, and scrutinize it for inaccuracies.
Earn more each year. This one is a no-brainer, since Social Security benefits are based upon your earnings history. Find a way to earn a bit more money each year, whether through a side job or going back to school to learn new skills that will advance you in the workplace.
Work for at least 35 years. Your benefits are calculated according to your 35 highest-earning years. If you don’t report income in many years, that’s a lot of zeros included in your calculation.
Keep working until your full retirement age. If you claim your benefits early, before you’ve reached “full retirement age” as defined by Social Security, your checks will be permanently reduced. Keep working so that you aren’t forced to claim your benefits early due to financial hardship.
Work until age 70. Claiming your benefits too early can result in smaller checks, but the opposite is also true. If you keep working until age 70, your benefits will increase by about 8 percent for each year that you delay claiming them.
Don’t forget your spousal benefits. If your work record doesn’t lend itself to a sizable Social Security benefit, investigate what you would receive by claiming spousal benefits instead. Your benefit will amount to 50 percent of your spouse’s checks, which could be greater than your own benefit amount. You can even claim spousal benefits if you’re divorced, so long as you were married for at least 10 years.
Don’t earn too much after you claim your benefits. If you claim your benefits before full retirement age, your Social Security checks could be heavily taxed depending upon your earnings. This is another good reason to delay claiming your benefits until later, when you’re finished working or you’re ready to work only part time.
Don’t forget your dependents. If you have a dependent child, you might also be able to claim Social Security for them once you claim your own benefits. Granted, your children are likely to be grown by this point, but this rule also applies if your adult child is disabled and dependent upon you.
Remember your survivor’s benefit. If your spouse dies, you can inherit their benefit if it is greater than your own.
For more information on Social Security benefits, or about retirement income planning in general, give us a call. We can help you find the solutions that fit your situation!
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