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You contribute to social security throughout your working life so that when you retire, you can benefit from a guaranteed income. You do not have a say in the amount of your social security contributions, but you have some control over the amount you withdraw. Here are four smart strategies you can use to increase your monthly benefits and enjoy a more comfortable retirement.
1. Work at least 35 years
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Social Security Administration (SSA) calculate your benefits looking at your average monthly income during your 35 years of highest earnings, adjusted for inflation (using a metric called LOVE.) If you have not worked at least 35 years, zeros are added to your calculation, which significantly reduces the average, resulting in a reduction in the monthly benefit. And if you have worked less than 10 years, you will not be eligible for social security benefits at all. "Data-reactid =" 13 "> The Social Security Administration (SSA) calculates your benefits based on your average monthly income during your 35-year highest income, adjusted for inflation (using a metric called If you have not worked at least 35 years, zeros are added to your calculation, which significantly reduces the average, which translates into a lower monthly value, and if you worked less than 10 years, you will not be eligible for social security benefits at all.
Pile of social security cards
Source of the image: Getty Images.
If you plan to retire before you've worked 35 years, consider delaying it enough so that you have 35 years of income to display for your social security benefits. It does not hurt to work even longer if you can, because delaying benefits leads to more significant checks later. In addition, it is likely that you will earn more money at the end of your career than when you start. When you are working for more than 35 years, the earliest and lowest earning years fall and are replaced by the highest earning years, which means more control over the benefits for you.
2. Increase your income
Your social security benefits are based on your income during your working life. Therefore, everything you do to increase your income will increase your future social security benefits.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "There are different ways to do it, you can do hours or continue to a promotion to your current position, change your business or take a higher education program to open new doors. side hustle or generate passive income through rental properties or royalties on creative works. Just be sure to declare to the government all the money you earn through side channels. Otherwise, your social security benefits will not be improved and you may be exposed to a tax audit. "Data-reactid =" 29 "> There are different ways to do this: You can work overtime or continue to your current job, change company, or follow a higher education program to open new doors. You can also get into the turmoil or generate passive income from rental properties or copyrights on creative works.If you do not do this, your social security benefits will not be helped and you could expose you to a tax audit risk.
3. Choose the right age to start social security
You can register for social security as soon as you reach the age of 62, but it's not a good idea unless you can not pay your bills without it or not anticipating a life. long.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "You have to wait until your full retirement age (FRA) – 66 or 67, depending on your year of birth – if you want the total amount of your benefits by check and for each month you apply for benefits before that age, the SSA will narrow your benefit checks. Claiming at age 62 means that you will only receive 70% of your scheduled benefits if your FRA is 67% or 75% if your FRA is 66. You can also defer benefits beyond your FRA and your checks. will increase until you reach the maximum. compensation at age 70. This corresponds to 124% of your projected benefit for the FRA of 67 and 132% for the FRA of 66. "data-reactid =" 32 "> You must wait for your full retirement age (FRA) – 66 or 67 , based on your year of birth – if you want the total amount of your benefits by check and for each month you apply for benefits before that age, the SSA will narrow your benefit checks – receive only 70% of your benefits provided by check if your FRA is 67% or 75% if your FRA is 66. You can also defer the benefits after your FRA, and your checks will increase until you reach the maximum benefits at 70. ' is 124% of your benefit provided for those whose FRA is 67 and 132% for those whose FRA is 66.
<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "It's up to you to decide when you want If you are not have not already done, create a my social security account estimate your monthly benefits at different ages based on your current work record. Multiply these amounts by 12 to get your estimated annual benefit, then by the number of years you expect to collect benefits to determine your estimated lifetime benefit. "Data-reactid =" 33 "> It's up to you when you want If you have not already created your social security account to estimate your monthly benefit at different ages based on your current work history, multiply this amount by 12 to get your estimated annual benefit, then by the number of years you expect to receive benefits to calculate your estimated lifetime benefit.
For example, if you receive a check for 1,000 USD per month from FRA and you receive benefits for 20 years, your lifetime benefit would be 240,000 USD (1,000 USD x 12 x 20). It is usually best to delay benefits if you plan to live long, but you should never postpone them for more than 70 years because your checks will not increase further after this point.
4. Coordinate with your spouse
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If one spouse earns much more than the other , consider asking the winning spouse less to start social security from age 62, while the higher support delays benefit payments until he or she receives a larger check, up to 39 that the latter will get a larger check than by themselves, the SSA will automatically switch them to the spousal benefit data-reactid = "40"> If one of the spouses earns much more than the other, consider asking the lesser spouse to start social security at 62, while the higher support delays the benefits up to age 70, then, if the lower support was entitled to a larger benefit based on a spouse's work history than on his or her own, the SSA would automatically switch to the spouse benefit when the higher support asked Social Security.
You can use a similar strategy if both spouses earn a similar amount, although the total lifetime benefits would not be very different from the one if both spouses took social security at FRA. In this scenario, it may be preferable for both spouses to delay benefits as long as possible.
Sit down with your wife and use the data from your my Security Security accounts to estimate how much you can each expect to receive and talk about when each of you plans to start applying for Social Security. Compare different scenarios until you find one that offers the best lifetime benefits for both of you.
You are never too young to start thinking about Social Security, and the sooner you do it, the more you can control the amount of your benefits. Try the four simple tips above and see what difference they can make for you.
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