How Seniors Can Increase Their Social Security Retirement Benefit
Claiming Your Social Security benefit can be complex and confusing. There are many options and strategies you can pursue, depending on your personal situation. Always consult with a qualified financial or legal advisor before you finalize your plans and start your monthly benefit.
One strategy to claim your benefit that will always result in a higher benefit is to wait as long as you can after reaching the age of 62 to begin receiving your benefit. You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to your full primary benefits only when you reach your full retirement age. For each month that you claim your retirement benefit before you reach your full retirement age, you will lose approximately one-half percent of your benefit. If you delay taking your benefits from your full retirement age up to age 70, your benefit will increase by approximately two-thirds percent per month, until you reach age 70.
For someone born in 1960, whose full retirement age is 67, and whose full primary retirement benefit is $1000 per month, it would look like this.
Benefit at Age 62 – $700 per month – 30% Reduction
Benefit at Age 67 (Full Retirement Age) – $1000 per month – Primary Benefit
Benefit at Age 70 – $1240 per month – 24% Increase
Furthermore, these amounts are all in today’s constant dollars. In addition to the retirement credits that accrue to you by waiting, you will continue to have the annual Social Security cost of living adjustments applied to your benefit each year.
Many advisors suggest that you estimate how long you will live as there is a breakeven point using age to calculate maximum lifetime earnings. Wouldn’t we all like to know how long we will live? Here are a few other circumstances to consider:
- If the higher-earning spouse is first to die, the lower earning spouse will be switched to the higher benefit (survivor’s benefit) as long as they have been married 10 years, and the surviving spouse is past their full retirement age.
- Some pension payments may be “single life” and stop at the death of a pensioner. The higher survivor’s benefit accrued by waiting to claim can offset some of lost income for the surviving spouse.
- As long as both the higher-earning and lower earning spouse are at their full retirement age, the lower earning spouse can switch to a “spousal benefit). This benefit may, in some cases be more than their own benefit.
Here are more details from the Social Security Website:
(e) What is the effect of my delayed retirement credits on the benefit amount of others entitled on my earnings record? —(1) Surviving spouse or surviving divorced spouse. If you earn delayed retirement credits during your lifetime, we will compute benefits for your surviving spouse or surviving divorced spouse based on your regular primary insurance amount plus the amount of those delayed retirement credits. All delayed retirement credits, including any earned during the year of death, can be used in computing the benefit amount for your surviving spouse or surviving divorced spouse beginning with the month of your death. We compute delayed retirement credits up to but not including the month of death.
(2) Other family members. We do not use your delayed retirement credits to increase the benefits of other family members entitled on your earnings record.
(3) Family maximum. We add delayed retirement credits to your benefit after we compute the family maximum. However, we add delayed retirement credits to your surviving spouses or surviving divorced spouse’s benefit before we reduce for the family maximum.
The information contained in this article is for educational purposes only. Bluffton Community Kitchen does not provide legal, tax or financial planning advice.