How to Boost Your Benefits and Gain an Extra $1,983 per Month Social Security Check
If you’re looking to enhance your Social Security benefits by a substantial amount, up to $1,983 per month, there is one key strategy you need to follow:
Delay claiming your payment until you reach the age of 70, even though you become eligible for Social Security at 62.
Understanding the Benefits of Delaying
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While the maximum monthly Social Security check at 62 is $2,572, the maximum check at 70 is a significant $4,555.
This translates to a $1,983 difference between the two payment amounts. The reason behind this discrepancy lies in the design of the Social Security system, which aims to balance out the lifetime income individuals receive, regardless of when they claim their benefits.
Claiming benefits early results in a higher number of smaller checks, while delaying benefits leads to fewer but larger checks.
Determining Your Benefit Increase
It’s important to note that your benefits may not increase by the full $1,983 if you wait until age 70. The specific amount of your benefit increase depends on your standard benefit.
Here’s how it works: Your standard benefit is calculated as a percentage of your average wages during the 35 highest-earning years of your career.
If you claim your benefits at full retirement age (FRA), you receive the standard benefit. However, if you claim before FRA, you’ll face early filing penalties that reduce your benefit.
On the other hand, if you delay claiming beyond FRA, you can earn delayed retirement credits until the age of 70, which increase your benefit.
Increasing Your Benefits Even If You Don’t Reach the Maximum
Individuals who consistently earn a high income each year, equal to or exceeding the “wage base limit,” have the potential to maximize their standard benefit and increase it to the maximum possible amount of $4,555 by delaying their claim.
Even if your standard benefit is below the maximum due to earning less than the wage base limit during parts of your career, you can still significantly boost your monthly Social Security check.
Calculating Your Benefits Increase
To determine the additional income you would receive by waiting until age 70 to claim your benefits, follow these steps:
- Find out your standard benefit amount. You can find this information at mySocialSecurity.gov.
- Calculate your benefit if you were to claim it at 62. Apply early filing penalties of 5/9 of 1% for each of the first 36 months you claim before your full retirement age, and 5/12 of 1% for any prior month. For example, if your FRA is 67 and you claim at 62, your standard benefit would be reduced by 30%. If you were on track for an $1,800 standard benefit, claiming it at 62 would reduce it to $1,260.
- Determine your benefit if you claimed it at 70. Apply delayed retirement credits of 2/3 of 1% of your standard benefit for each month until 70. For instance, if your FRA is 67, you would increase your benefit by 24%, resulting in a total of $2,232 instead of $1,800.
- Calculate the difference between claiming at 70 versus 62. In this case, you would increase your benefit by $972 per month if you chose to delay.
As you can see, regardless of your standard benefit amount, delaying your claim until 70 instead of starting it at 62 will lead to a significant increase in your monthly Social Security benefits. I
t’s essential to consider that you will be giving up eight years of income by delaying, but if your goal is to maximize your monthly benefit, delaying is undoubtedly a smart decision.
The Overlooked Social Security Bonus of $21,756
Did you know that many retirees overlook a valuable Social Security bonus worth $21,756? If you find yourself a few years behind on your retirement savings, it’s crucial to be aware of little-known “Social Security secrets” that can help boost your retirement income.
One such trick can potentially increase your annual income by $21,756. Learning how to maximize your Social Security benefits is key to retiring confidently with the financial peace of mind we all desire.
