Let’s Talk Social Security
- February 20, 2023
- Social Security
For most Americans, Social Security provides a solid foundation for retirement income. In fact, as of September 2022, over 70 million Americans were collecting benefits. However, not everyone knows exactly how or when to start tapping into this valuable resource. As you grow older and retirement looms on the horizon, the decisions you make start to have a more crucial impact on the amount of money you receive, so it’s important that you know what to expect. Let’s discuss how you can maximize your benefits and give yourself the best possible chance to live out the retirement of your dreams.
Starting with the Basics
Social Security is a federal program that was ultimately designed to support disabled and retired workers and their families by providing them with a source of income in retirement. Your benefits will depend on how much you contribute to Social Security throughout your lifetime. You should keep in mind that your Social Security benefits alone will not likely be able to maintain your current lifestyle. You might also have a company sponsored retirement account such as a 401(k) or 403(b), or an IRA or pension that will supplement your Social Security benefits. Social Security can provide a base for your retirement income. Plus, it’s guaranteed for life!
Maximizing Your Benefits
There are many different approaches that you can take to get the most out of your Social Security benefits. Let’s discuss a few.
- First and foremost, it is recommended that you work for at least 35 years. Although individuals that have worked for just 10 years are eligible to claim Social Security, you’ll get much more bang for your buck the longer you work. In fact, your benefit amount is based on the average of your 35 highest-earning years, adjusted for inflation. So, it’s easy math: the less you work, the less you’ll earn.
- Next, try to hold off on filing for Social Security benefits until you reach full retirement age. While you can begin to enroll in benefits at age 62, there is an earnings test until you reach your Full Retirement Age (FRA), between age 66 and 67. This means that, if you make too much, you may have to pay back some or even all of your Social Security benefits. Meanwhile, the benefit will continue to increase if you defer to age 70. It’s important to note, however, that once you reach 70 years old, the increase in benefits ceases. For those who have little income, it may be wise to enroll in spousal benefits. In some cases, married individuals can earn up to an impressive 50% of their partner’s benefit. This resource can be a game-changer for those in a pinch.
- Lastly, it is crucial that individuals planning to earn Social Security monitor their earnings and check for mistakes once enrolled. Even the smallest miscalculations can impact your retirement income, so be vigilant!
All in all, Social Security is a vital aspect of everyone’s retirement plan, and while it may seem daunting, a social security strategy that works for you is within reach, and we are here to help. We’ve only scratched the surface with this discussion of Social Security. If you have questions regarding how you can make the most of your benefits, reach out to us today for a complimentary review of your finances.