How To Maximize Your Social Security Benefits

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Social Security Benefits

Start Early, but With Caution

Starting your Social Security benefits at age 62 might seem appealing, but doing so significantly reduces your monthly payments. Early retirement might be beneficial if you have health concerns or immediate financial needs. However, delaying your claim can substantially increase your benefits. It’s crucial to balance your current financial situation with your long-term retirement goals to make the best decision.

Full Retirement Age (FRA)

Your Full Retirement Age (FRA) varies between 66 and 67, depending on your birth year. Understanding your FRA is vital because it impacts the amount you’ll receive. Claiming benefits before your FRA results in reduced payments, while delaying can increase them. Knowing your FRA helps you plan your retirement more effectively.

Delayed Retirement Credits

Every year you delay claiming Social Security past your FRA, your benefits increase by 8%, up to age 70. This delay strategy can significantly boost your monthly income during retirement, providing a higher financial cushion. If you can afford to wait, this can be a powerful tool to maximize your benefits.

Earnings Record

Social Security benefits are calculated based on your highest 35 years of earnings. Ensuring your earnings record is accurate is essential. Review your Social Security statements regularly to correct any errors. Maximizing your earnings years will positively impact your benefits.

Benefit Calculation

Your benefits are calculated using your average indexed monthly earnings (AIME). This formula considers your highest 35 years of earnings, adjusted for inflation. Understanding this calculation can help you make strategic decisions about when to retire and how to maximize your benefits.

Strategizing Your Claims

Estimate Your Benefits

Utilize the Social Security Administration’s online tools to estimate your benefits. These tools can provide a clear picture of what you can expect based on your earnings history and retirement age. Accurate estimations allow for better financial planning.

Spousal and Divorced Spousal Benefits

You can claim benefits based on your spouse’s or ex-spouse’s earnings record if you were married for at least ten years. This option can be advantageous if your spouse’s earnings were significantly higher than yours. It’s essential to explore these benefits to maximize your household’s total income.

Survivor Benefits

Widows and widowers are eligible for benefits based on their deceased spouse’s earnings record. These benefits can provide financial security after the loss of a spouse. Understanding and planning for survivor benefits is crucial for long-term financial stability.

Maximizing Spousal Benefits

One strategy to maximize spousal benefits involves one spouse claiming early while the other delays. This approach allows the higher-earning spouse’s benefits to grow, providing a larger income later. Coordinating benefits can maximize your household’s total Social Security income.

Timing and Financial Considerations

Work as Long as Possible

Continuing to work can increase your lifetime earnings, boosting your Social Security benefits. Higher lifetime earnings result in higher monthly payments, so it’s beneficial to extend your career if possible.

Avoid Early Claim Pitfalls

Claiming benefits early can permanently reduce your monthly income. If you have a longer life expectancy or can manage financially without early benefits, waiting can provide greater long-term security.

Consider Health and Longevity

Your health and expected longevity should factor into your decision on when to claim benefits. If you expect a longer retirement, delaying benefits can provide higher monthly income over a longer period.

Tax Implications and Other Income

Be aware that up to 85% of your benefits can be taxable. Combining Social Security with other income sources, like retirement accounts, can affect your tax and benefit amounts. Planning for these tax implications is essential to maximize your net income.

Social Security Full Retirement Age

Year of BirthFull Retirement Age
1937 or earlier65
193865 and two months
1939 65 and four months
1940 65 and six months
1941 65 and eight months
1942 65 and ten months
1943-1954 66
1955 66 and two months
1956 66 and four months
1957 66 and six months
1958 66 and eight months
1959 66 and ten months
1960 or later 67

How We Can Help

At The Annuity Expert, we understand that navigating Social Security can be overwhelming. With 15 years of experience as an insurance agency, annuity broker, and retirement planner, we are dedicated to finding the best solutions at the lowest costs. We stand for providing personalized, thoughtful, and strategic advice to help you make informed decisions about your retirement.

We recognize that securing your financial future is more than just understanding benefits; it’s about integrating all aspects of your retirement plan to maximize your income and minimize your stress. Our expertise and personalized approach ensure that you receive the guidance tailored to your unique situation, making you feel valued and supported.

How Does Social Security Work

What We Recommend

Step 1: Initial Consultation

Contact us for a free initial consultation. During this meeting, we’ll review your current financial situation, earnings record, and retirement goals. The main benefit is gaining a clear understanding of your potential Social Security benefits and how they fit into your overall retirement plan.

Step 2: Personalized Strategy Development

We will develop a personalized strategy that maximizes your benefits and integrates them with your other retirement income sources. This step involves detailed planning and adjustments to ensure your strategy aligns with your goals. The main benefit is having a tailored plan that optimizes your financial security.

Step 3: Implementation and Ongoing Support

We will guide you through the implementation of your strategy, ensuring all steps are correctly executed. We provide ongoing support to adjust your plan as needed, considering any changes in your life or regulations. The main benefit is continuous, expert support to keep your retirement plan on track.

Features and Benefits

  • Personalized Advice: Tailored strategies to maximize your Social Security benefits.
  • Comprehensive Planning: Integration of Social Security with other retirement income sources.
  • Expert Guidance: 15 years of experience ensuring informed and strategic decisions.
  • Ongoing Support: Continuous adjustments and support to keep your plan on track.
  • Tax Optimization: Strategies to minimize the tax impact on your benefits.

Addressing Objections

  • Complexity: We simplify the process, making it easy to understand and execute.
  • Cost: Our initial consultation is free, and we strive to find cost-effective solutions.
  • Uncertainty: Our ongoing support ensures your plan adapts to any changes.

Failing to work with us can lead to missed opportunities for maximizing your benefits, increased tax liabilities, and a less secure retirement. By choosing The Annuity Expert, you secure a partner dedicated to your financial well-being, providing peace of mind and a solid foundation for your retirement.

Internal feelings you’ll experience from these successful outcomes include confidence, security, and relief knowing your financial future is well planned. Contact us today for free advice or a quote and take the first step towards a secure and comfortable retirement.

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Questions From Our Readers

When will Social Security Benefits run out?

The 2021 report from the Social Security Board says that by 2034, the extra money for Social Security payments will be used up a year earlier than previously thought. But this doesn’t mean Social Security disappears. It means it will only have enough money to pay about 78% of the usual benefits from what people pay yearly.

How does Social Security work if you retire mid-year?

If you retire mid-year, things can get complicated because your yearly income may not be consistent. Therefore, when calculating your benefits, the SSA will average your income from up to three of the most recent years you have worked.

When to apply for social security?

When to apply for Social Security benefits depends on various factors, including your desired retirement age and financial needs. However, the earliest you can apply is at the age of 62. It’s important to note that applying early may result in reduced monthly benefits while waiting until full retirement age can provide higher benefits.

How much social security will I get if I make $60,000 annually?

If someone earns $60,000 a year, their estimated Social Security benefit can be calculated. However, the exact amount can vary based on their age and the number of years they have paid into Social Security. To get an accurate estimate, it is recommended to use the official Social Security Administration’s online calculator.

How do you get the $16,728 Social Security bonus?

To receive the $16,728 social security bonus, individuals must strategically start claiming benefits at the right age. Delaying benefits until age 70 can result in a larger monthly amount and maximize the bonus. By following the guidelines set by the Social Security Administration, individuals can maximize their retirement benefits.

If you don’t file for Social Security, do you still need to claim 401k money on Social Security?

If you haven’t filed for Social Security benefits, your 401k withdrawals or income won’t affect them directly. Social Security benefits are calculated based on your earnings record and the age you start receiving them. However, 401k withdrawals can affect the taxation of Social Security benefits once you start receiving them.

Can my wife receive spousal benefits from Social Security when I retire if she’s already drawing her own benefits, and can she reapply for these spousal benefits when I start receiving mine?

Yes, your wife can potentially receive spousal benefits even if she is currently drawing her own Social Security benefits. She can apply for spousal benefits once you start receiving your Social Security. If her spousal benefit is higher than her current benefit, she will receive an amount that supplements her benefit up to the spousal benefit level. However, the total amount she receives will not exceed the maximum spousal benefit, typically up to 50% of your full retirement benefit.

If I keep working for the next couple of years at a lower-paying job than my previous job, will that lower my SS payments when I get them?

Sure, if you keep working at a job that pays less than your previous ones, it might have a small effect on your Social Security payments down the line. Your Social Security benefits are figured out based on your highest-earning 35 years of work. So, if you’ve already clocked in 35 years with higher earnings, adding a couple more years with a bit less pay won’t really change your average earnings a lot. But if you haven’t hit those 35 years of higher pay yet, then these years with lower earnings will be part of the mix, and that could bring your average down a bit.

If you receive Social Security benefits and become disabled, can you also collect from private disability insurance?

Yes, generally, you can collect from private disability insurance even if you are receiving Social Security benefits. However, the amount you receive from private disability insurance might be influenced by your Social Security benefits. Some policies have provisions that reduce the insurance payout by the amount you receive from Social Security.

Does Social Security pay death benefits?

Social Security pays the surviving spouse or eligible children a one-time death benefit of $255. Additionally, monthly survivor benefits may be available to family members based on the deceased’s earnings record. It does not offer life insurance.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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