3 Smart Social Security Moves Anyone Can Do – Motley's Fool

If you do not already receive regular Social Security payments, you will probably do it someday and if you want to be smart about it by collecting as much as you can, do not just leave it to chance.

The income you receive from social security is not static: you can take steps and make decisions today that will determine the size of your benefit checks. Here are three smart social security moves you should make.

# 1: Do not rely on Social Security to support you

To begin, do not assume that social security will be enough, or nearly so, to help you retire. The program was designed to replace about 40% of pre-retirement income, although this percentage varies slightly depending on your level of income.

Despite the fact that social security is a savings supplement, since many Americans retire with much less money than they need, social security becomes an extremely important source of income for many. . According to the Social Security Administration (SSA), 21% of married seniors living in social security and 44% of single people get 90% or more of their income from the program, while 48% of married elderly Social Security recipients and 69% of single people get 50% or more of their income.

So, what exactly can you expect? Well, the average monthly Social Security retirement benefit recently was $ 1,467, or about $ 17,600 a year, but you'll reap more if your income history puts you above the average. . Nevertheless, it will not be a princely sum: the maximum monthly benefit for those retiring at retirement age in 2019 is $ 2,861 – $ 34,000 for the year.

You will probably need additional income from your own savings in retirement and brokerage accounts enjoying tax benefits, or from other sources such as pension income, income investments fixed or annuities. You may even have to work at retirement to make ends meet, but make sure you know the earnings test if you plan on continuing to earn a salary while receiving benefits.

N ° 2: aim to strengthen your profits

To get a more accurate estimate of the amount you can expect to collect from social security, open a "my social security" account on SSA.gov, if it's already done. Once you have logged in, you can view the history of the SSA regarding your income and taxes paid to the social security system, as well as an estimate of your future benefits. It is good to check these records regularly to make sure your income and taxes paid are correct. If this is not the case, you may receive smaller benefit checks than the ones you have earned.

In the meantime, you have several ways to increase your social security benefits.

Start with the age at which you start to claim benefits. You can collect benefits from the age of 62 and up to the age of 70. For every year that you are late in collecting beyond your retirement age (FRA), 66 or 67 depending on your year of birth, your benefits are increased by 8% – up to the age of 70 . Delaying the age of 67 to 70 can make your checks fatter by 24% – enough to turn a $ 2,000 monthly check into a check for $ 2,480.

Of course, if you start collecting early, your benefit checks will be smaller – but do not rule out the possibility of taking out early. Yes, the checks will be smaller, but you will have many more. The system is designed so that people with average lives accumulate about the same amount, no matter when they start collecting. For many people, it may be best to start collecting at age 62.

You can also work for at least 35 years, because the formula for calculating your benefits is based on your earnings during the 35 most profitable years (adjusted for inflation). If you have only earned one income for 29 years, the formula has six zeros, which gives you smaller checks than you would otherwise have received.

You also want to have as many years of high income as possible. If you currently earn a lot more than in the past (on an inflation-adjusted basis), even if you've worked 35 years, you might consider working for a year or two, because every year that pays a lot Start a year of low income, which increases your benefits based on indexed average monthly earnings (AIME).

# 3: Coordinate plans with your spouse

Finally, be sure to intelligently coordinate your social security strategy with your spouse. Depending on your age and income history, you can use different strategies.

For example, low wages begin to collect earlier, while high incomes are slow to collect benefits. This allows these already larger benefits to grow and gives you an income earlier than you both, until the big checks arrive later. Moreover, if one of you dies, the other will be able to get the higher benefit of both, and it would be useful to make one as big as possible.

The more you learn about social security, the more you'll get out of it – and that could make a significant difference to your retirement.