5 Social Security Tips for 2019 – and Beyond – Motley's Fool

If you do not get a large pension income, you'd better make sure you're very knowledgeable about social security and know how to get the most out of the program.

Here are five essential things to know about Social Security. Putting them at your fingertips will help you not to leave precious retirement income on the table.

# 1: Set up a My Social Security account

First things first. If you have not already done so, go to the Social Security Administration (SSA) website and create a my Social Security account. This will give you a good estimate of the income you can expect from Social Security based on your income history so far. You will also be able to view the history of your SSA earnings throughout your active life. It's convenient, because if there are errors, you may end up with smaller benefit checks than the ones you actually earned. With a social security account, you can correct errors, apply for a replacement social security card (if you meet certain criteria) and manage other social security activities. Better yet, creating an account can also prevent identity theft and headaches. Some fraudsters have opened accounts on behalf of people who have not yet done so, in order to collect their benefits.

N ° 2: Understand how your benefits are calculated and how to increase them

It is also helpful to understand how your benefits are calculated because you have some control over some of the numbers included in the formula. (Indeed, you can increase your social security benefits in different ways.) To begin, be aware that the formula takes into account your earnings in the 35 years you earned the most (adjusted for 39; inflation). So, if you only earned your income in 30 years, the formula will incorporate five zeros, which will leave you with fewer benefits.

It is also useful that these incomes be as high as possible. This is one more reason to consider applying for a salary increase or applying for higher paying jobs. If you are currently earning much more than in the past (on an inflation-adjusted basis), even if you have already worked 35 years, you might consider working for a year or two because every year that pays a lot start up a year of low income in the calculation, thus strengthening your benefits. Remember, these are your 35 highest paying earnings that are used in the calculation.

N ° 3: Know your retirement age

Then, if you want to be able to make informed decisions about your social security benefits, you need to know your "retirement age". It is the age at which you have the right to start receiving your full social security benefits. Previously, this age was 65, but for most of us it is 66 or 67 years old, or somewhere in between. You can find your own full retirement age in the table below:

Data source: Social Security Administration.

N ° 4: Think about when you want to start receiving benefits

Once you know your retirement age, you can start thinking about when you will start receiving benefits. You can start from the age of 62 and up to the age of 70. For every year beyond the age of retirement that you delay in starting to receive benefits, you increase their value by about 8% – up to the age of 70 . Delay from age 67 to 70, and you can end up with checks about 24% larger – enough to turn a check for $ 2,000 into a check for $ 2,480. Of course, if you start taking off early, your benefit checks will be smaller – but it's not that bad as it looks, and starting to draw early makes a lot of sense for a lot of people. people. Do not forget that if your checks are smaller, you will have many more.

To help you understand the effect of starting to collect sooner or later, the table below shows the approximate percentage of your full social security benefits you will get if you start collecting at different ages. So, if your retirement age is 67 and you start collecting, for example, at age 64, you will receive 80% of the amount you would have had if you had started at age 67.

Data source: Social Security Administration.

If you are married, be sure to coordinate your social security benefit collection plans, as some strategies can help you get more, on average, over the long term.

N ° 5: Know how much income you can expect

Finally, be sure to regularly check the income you can expect to receive from Social Security as it is an important factor in planning your retirement. If, for example, you know that you want $ 65,000 a year in retirement and you expect to collect $ 25,000 from Social Security, you'll know you have to plan for the rest, or $ 40,000 a year. (This can come from dividends, annuities, a pension, other investments or from a combination of sources.)

As a reminder, note that the average monthly amount of retirement checks was $ 1,470, or about $ 17,600 per year. However, if you have had a higher than average income for a long time, you will reap more than that – and vice versa. For 2019, the maximum benefit for those retiring at retirement age is $ 2,861 and the maximum benefit for those who wait until the age of 70 is 3,770 $. These two monthly sums represent approximately $ 34,000 and $ 45,000 per year respectively.