How to increase your Social Security benefits

3 Smart Ways to Increase Your Social Security Benefits

While Social Security will likely only cover a portion of your income needs in retirement, it can be of significant help in filling any income “gaps” you may have in your retirement savings. It is especially important to make sure you are maximizing your Social Security benefits if you haven’t saved quite as much for retirement as you had planned. There are several ways that you can increase your Social Security benefits, both during your working years, and after you retire.

Here are 3 smart ways to maximize your Social Security benefits that you might not be aware of:

1.) Delay Your Retirement

While you can claim Social Security benefits as early as age 62, many people choose to wait until later in order to receive a larger benefit. If you claim before full retirement age (which is age 67 for people born in 1960 and later), you will permanently reduce your Social Security benefits. On the other hand, if you wait until age 70 to claim, you will earn “delayed retirement credits,” which will permanently increase your benefits – even more than retiring at your full retirement age (FRA). In fact, those with an FRA of 67 can increase their Social Security benefits by 24% if they wait until age 70 to file!1  This can make a significant difference in your retirement income in your later years.

2.) Maximize Nontaxable Income Sources

Some people don’t realize this, but depending on your other sources of retirement income, up to 85% of your Social Security benefits may be subject to tax. This can take a big bite out of your Social Security check.

So, how can you get around this?

By planning smartly and strategically both during your working years, and during the “distribution phase” of your retirement!

The Social Security taxation threshold is based on how much taxable income you receive from other sources. But if you save post-tax income into vehicles such as a Roth IRA or a well-structured whole life insurance plan, you can potentially withdraw tax-free income during your retirement years. This means that with proper planning, you may be able to stay below the Social Security taxation threshold by strategically managing your withdrawals in retirement. (You should consult with an accountant as well as a Social Security specialist who is well-versed in retirement planning in order to make sure you are setting everything up properly to utilize this strategy.)

3.) Take Advantage of Survivor & Spousal Benefits

If you are eligible for survivor or spousal benefits, you may be able to significantly increase the size of your monthly Social Security check. Widows and widowers can claim survivor benefits, and if you wait until your full retirement age, you could receive 100% of your deceased spouse’s benefit. If your income was lower than your spouse’s, this could greatly increase the benefit you receive.

If your spouse is still living and had significantly higher lifetime earnings than you, you may want to choose to claim a spousal benefit instead of your own. A spousal benefit can be as much as 50% of your spouse’s regular benefit.

Either of these options may be available even if you are divorced. If you were married to your spouse for at least 10 years, and are now unmarried and over the age of 62, you can file a claim for a spousal benefit as long as your ex-spouse is entitled to Social Security benefits. (Survivor benefits are also available to ex-spouses.)

By utilizing smart strategies like those listed above, you may be able to significantly increase your Social Security benefits and enjoy a more comfortable and stress-free retirement. Keep in mind that these strategies may require some complex planning, and the rules can change from year-to-year, so it is a good idea to consult with an expert before making any moves in this arena.

If you would like to speak with a Social Security specialist with experience with these types of strategies, please contact our office today for a FREE initial consultation. Our experts can conduct a comprehensive retirement review to make sure you are on the right track to a comfortable retirement!

 

Sources:

1) http://www.foxbusiness.com/markets/2017/10/20/3-ways-to-make-your-social-security-benefits-bigger.html

 

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