If you’re nearing retirement and wondering how to make the most of your Social Security benefits, you might be interested in a strategy that could increase your monthly check by up to $460. Here’s a straightforward guide on how you can boost your benefits and what you need to consider.
How Does the SSA Calculate Your Social Security Check?
The Social Security Administration (SSA) determines your benefits based on your Primary Insurance Amount (PIA). Your PIA is calculated using your highest-earning 35 years of work, adjusted for inflation.
At your Full Retirement Age (FRA), which is between 66 and 67 in 2024, you’re eligible to receive your full PIA.
If you start your benefits before reaching your FRA, your monthly payment will be reduced. For each month before your FRA that you start benefits, you lose about 1%, or nearly 6.7% per year.
For example, starting benefits 36 months early can significantly reduce your payments, making it important to carefully choose when to claim.
The Strategy to Increase Your Social Security Check by $460
One effective way to enhance your Social Security benefits is to delay claiming them until after reaching your FRA. If you wait until age 70 to start your benefits, you can earn an extra two-thirds of one percent per month,
which adds up to 8% annually. Delaying benefits from age 67 to 70 could result in a monthly increase of up to 24%.
For instance, if your monthly benefit at age 67 is $1,915, waiting until age 70 could increase it by $460. However, this strategy requires you to forego some benefits in the short term in exchange for larger payments later. It’s important to assess whether you can afford to delay.
Pros and Cons of Delaying Your Benefits
Pros:
- Higher Monthly Payments: Waiting results in increased monthly payments.
- Increased Lifetime Benefits: If you live past your 70s, the overall benefits may be higher.
Cons:
- Delayed Income: You won’t receive payments until you start claiming, which might be challenging if you need funds immediately.
- Health Concerns: If you have health issues or a shorter life expectancy, waiting might not be beneficial.
What If You Need to Claim Your Benefits Early?
If you can’t delay your benefits due to health or financial reasons, there are still ways to maximize them.
For example, waiting just one month before claiming can add $8 to $13 to your monthly payment. Claiming at age 63 instead of 62 could also slightly increase your benefits. It’s crucial to consider your life expectancy and financial situation when deciding.
Choosing the right time to claim your Social Security benefits is a significant decision that affects your financial future. By understanding the SSA’s calculation methods and weighing your personal circumstances,
you can make a well-informed choice. Whether you opt to delay your benefits or claim them early, take into account your health, financial needs, and life expectancy to ensure you make the best decision for your retirement.
1. What is the Primary Insurance Amount (PIA)?
The Primary Insurance Amount (PIA) is the base amount used to determine your Social Security benefits. It’s calculated based on your highest 35 years of earnings, adjusted for inflation.
2. How does delaying my Social Security benefits increase my payments?
By delaying your benefits until age 70, you earn an additional two-thirds of one percent per month, or 8% per year. This can increase your monthly payments significantly.
3. What happens if I claim my benefits before my Full Retirement Age (FRA)?
Claiming benefits before your FRA will reduce your monthly payments. You could lose about 1% per month or nearly 6.7% annually for each month you claim early.
4. Are there any downsides to delaying my Social Security benefits?
Yes, delaying benefits means you won’t receive payments until you start claiming them. This could be challenging if you need income immediately. Additionally, if you have health issues or a shorter life expectancy, waiting might not be beneficial.
5. What should I do if I need to claim my Social Security benefits early?
If you need to claim early due to financial or health reasons, you can still increase your benefits slightly by waiting just a month or claiming at a slightly older age, such as 63 instead of 62.
