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Ways to Increase Your Social Security Benefits

October 16, 2020

Editor's note: The following post has been contributed by Andy Masaki. Andy is a blogger and financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums, where he shares his advice as well as tips to lead a financially independent life.

Everyone wants a comfortable retirement to relax during their golden years. But a recent report by Barron's revealed that most of the retirees are stressed about their income in retirement.

In our country, Social Security payments are one of the major sources of income for most retirees. In 2020, you can receive up to $3,790 per month as your Social Security benefits. But the fact is, many people don’t receive that much. According to the Social Security Administration, the average check is around $1,390.12.

So, what can you do to maximize your Social Security payments?

Here are some of the best possible tips to increase your Social Security benefits so that you can relax during your golden years. Let’s start.

Procrastinate on Your Retirement
When are you planning to claim your Social Security benefits?

Because the amount of benefits you will receive post-retirement depends on your age of claiming it. If you have accumulated 40 work credits, you can claim your benefits at the age of 62. But that will slash your benefits by almost 30%.

To receive the full benefits, you need to claim it after attaining the full retirement age (FRA). If you were born between 1943 and 1954, your FRA would be 66; and 2 months will be added to the FRA (66 years) for every year after 1954 to 1959. If you were born in 1960 or later, your FRA is 67 to claim your full benefits.

However, if you delay your retirement to the age of 70, you can increase your benefits. The Social Security Administration (SSA) offers delayed retirement credits that increase your benefits by almost 8% for every year you delay your claim. However, once you turn 70, you won’t get any benefits for delaying your claim for benefits.

Work for a Minimum of 35 Years
Your pre-retirement earnings play a major role in deciding your monthly payouts. The higher your pre-retirement earnings, the higher your Social Security payout.

Your highest-earning 35 years are considered to determine how much you will receive after retirement.

The Social Security Administration (SSA) will calculate the average of your highest-earning 35 years and divide it by 12 to find out your average indexed monthly earnings (AMIE). Your AMIE is then used to determine your basic retirement benefit based on the Cost-of-Living Adjustment (COLA).

It means, by increasing your income, you can boost your Social Security benefits too.

However, if you have less than 35 years of earnings, the SSA will give zeros for the years that you haven’t worked. Eventually, it will reduce your AMIE and that can reduce your monthly Social Security payout.

So, if you have breaks in your employment, it’s better to continue working and try to replace your lower-paid years with higher-paid ones. Thereby, you can increase your Social Security benefits as your AMIE is likely going to be up.

Besides, working longer and increasing your earnings can help you to build substantial savings for your retirement fund. And it can help you to stay away from debt obligations as entering retirement with debt can ruin your nest egg.

Take Advantage of Spousal Payments
If you are at least 62 years old, you can delay claiming your benefits and take out 50% of your spouse’s payout. To be eligible for this benefit, you should be married for a minimum of 1 year. And if you are divorced, your marriage must have lasted for at least 10 years. However, if you have remarried, you can’t claim the benefits.

Usually, the higher-earning spouse has to start receiving benefits so that the other spouse can get benefits. And you can delay claiming until you turn 70 so that you can reap the maximum benefits. At that time, if your check is bigger than that of your spouse, he/she can claim spousal benefits.

Brace Yourself from Social Security Taxes
According to the IRS (Internal Revenue Services), you have to pay a tax of about 50% to 85% on your Social Security payments based on your tax filing status and combined income. Your combined income is the sum of your adjusted gross income, tax-exempt interest, and half of your Social Security benefits.

In 2020, you have to pay an income tax on 50% of your Social Security payments if:

  • You are a single filer and your combined income is between $25,000 to $34,000.
  • You are a joint filer and your combined income is between $32,000 to $44,000.

If your combined income is more than the above ranges, you have to shell out a tax of 85% of your benefits.

So, you can spread the income over a span of years so that you don’t receive it all of a sudden. Thereby, it will help you to reduce your taxable income. And you can reap the maximum benefits of your Social Security payments.

Have You Already Claimed Your Benefits?
If yes, you can suspend your benefits after attaining your full retirement age. You can request to suspend your benefits over the phone or by visiting the nearby Social Security office. Suspending your benefits can help you to earn the delayed retirement credits of about 8% every year till you hit the age of 70.

However, if you suspend receiving your payments, your spouse and children cannot receive spousal and family benefits based on your work history. They will start getting benefits again once you remove the suspension and start withdrawing your Social Security payouts.

Hopefully, the above tips will help you to maximize your Social Security benefits. And thereby, you can lead a comfortable life after your retirement.

Besides, I would like to suggest you please don’t make Social Security payments as your sole source of income after retirement, in which case you can contact us today at (800) 313-PLAN(7526) or!