If you’re receiving Social Security benefits or planning to, there’s a way to potentially increase your monthly payout by more than 25%, even if you’ve already started claiming. The amount you receive each month depends on several factors, some of which you can control.
Understanding when to start claiming benefits is crucial because claiming earlier means smaller payments. Waiting until your full retirement age (typically around 67) or even until age 70 can significantly boost your benefits—up to 77% more than if you start at 62.
Factors Affecting Your Benefits
When you apply for Social Security retirement benefits, the government reviews your earnings history. They adjust your earnings each year to account for changes in the cost of living, then calculate your average earnings over the 35 years with the highest adjusted earnings. This average determines your Primary Insurance Amount (PIA), which is crucial in determining your benefit amount.
How Age Impacts Your Benefits
Your birth year and the age at which you start claiming benefits affect how much you receive monthly. The table below shows the percentage of your PIA you’ll get based on your birth year and claiming age:
| Birth Year | Age 62 | Age 65 | Age 70 |
|---|---|---|---|
| 1943 to 1954 | 75% | 93.3% | 132% |
| 1955 | 74.2% | 98.9% | 130.7% |
| 1956 | 73.3% | 97.8% | 129.3% |
| 1957 | 72.5% | 96.7% | 128% |
| 1958 | 71.7% | 95.6% | 126.7% |
| 1959 | 70.8% | 94.4% | 125.3% |
| 1960 or later | 70% | 93.3% | 124% |
Increasing Your Benefits
To potentially increase your benefits by up to 28%, you can utilize a strategy involving delayed retirement credits. This means suspending your benefits once you reach your full retirement age. During this suspension, you won’t receive monthly checks, but you’ll earn credits that can increase your benefit amount. Benefits automatically resume when you turn 70.
Important Considerations
Before suspending benefits, consider these points:
- No one else (except a divorced spouse) can collect benefits on your record while your benefits are suspended.
- Medicare Part B premiums must be paid out of pocket during the suspension period.
FAQs
How can I increase my Social Security benefits?
You can increase your benefits by delaying when you start receiving them, up to age 70.
When should I start claiming Social Security benefits?
Waiting until your full retirement age or later can significantly increase your monthly benefit.
What happens if I claim benefits early?
Claiming early reduces your monthly benefit compared to waiting until full retirement age or later.
Can I suspend my Social Security benefits?
Yes, you can suspend them after reaching full retirement age to earn delayed retirement credits.
What are delayed retirement credits?
These are credits earned when you delay claiming Social Security benefits beyond your full retirement age, increasing your monthly benefit.
Understanding how to maximize your Social Security benefits is crucial for financial planning in retirement. By strategically timing when you start claiming benefits and considering options like suspending benefits to earn credits, you can potentially increase your monthly income significantly.