How to Maximize Your Social Security
When you decide to start taking your Social Security benefit can greatly impact the monthly amount you receive. You can receive your Social Security retirement benefit as early as age 62. However, by putting off your benefit start date, you can receive a check that is approximately 8% higher each year you delay receiving your benefit. Here are some tips to plan now and maximize your Social Security payments.
Full retirement age. Those born between 1943 and 1954 reach their full Social Security benefit payment at age 66. This is your full retirement age. The full retirement age increases by two months each year after 1954 until reaching the full retirement age of 67 for those born in 1960 or later.
Early benefit penalty. Retirees born between 1943 and 1954 can begin receiving their benefits at age 62. But if you start your benefits before reaching your full retirement age, the amount paid to you is permanently reduced.
Bonus payment amounts. There is also a bonus for each year you delay receiving benefits past your full retirement age. Your Social Security benefit increases by 8% per year.
The maximum cap amount. After age 70, the Social Security benefit is maximized. Further delay in starting your benefits adds no additional payments.
Is a delay worth the wait?
Here are reasons to delay receiving your Social Security benefits until you reach age 70:
- You expect to live longer. If your parents and grandparents lived long lives, you may wish to delay receipt of your initial Social Security benefits. The opposite is true if you have a shorter life expectancy.
- You do not need the income. If you are still working or have alternative income sources, it may be better to delay receiving your benefits. An 8% increase in monthly payments is a good increase versus other investment alternatives.
- Your spouse has died. You must review the possibility of receiving survivor benefits based on your spouse’s earnings. Later, you could start collecting your own Social Security retirement benefits based on your earnings.
- Your benefits are taxed. If you have other income, then your Social Security retirement benefits could be subject to income tax if you are not yet at the full retirement age.
Maximize your Social Security
Should you delay receiving your Social Security benefits? There often is not one answer that fits all situations. Consider reviewing your situation before making a decision. Of course, contact our RRBB advisors with any questions or concerns.
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