SOCIAL SECURITY MAXIMIZATION
Maximize your social security benefits
The greatest fear for most Americans today is not death, but the risk of outliving their assets during retirement – 61% in fact*. If you happen to fall into that statistic, you may be wondering what the best strategy is to maximize your Social Security benefits and create a financial plan that can help minimize your taxes so you can live the prosperous retirement you’ve always dreamed of- without running out of money.
Social Security Maximization
The biggest effect you can have on your Social Security benefit is selecting the optimal time you claim.
How does Social Security work?
The Social Security system is based on a simple premise: Throughout your career, you pay a portion of your earnings into a trust fund by paying Social Security or self-employment taxes. Your employer, if any, contributes an equal amount. In return, you receive certain benefits that can provide income to you when you need it most--at retirement or when you become disabled, for instance.
You can find out more about future Social Security benefits by signing up for a mySocial Security account at the Social Security website, www.ssa.gov, so that you can view your online Social Security Statement.
The biggest effect you can have when maximizing your benefits is the time you that you claim. You have the option to claim social security anywhere between the ages of 62 and 70. The longer you wait, the more benefit you will receive. At 70, the benefit is 2x more than age 62.
For example, if a person receives $2,000 per month in social security at their full retirement age of 66, they would receive 25% less – or $1,500 - if they had signed up at age 62. If they waited until age 70 to collect, they’d receive $2,640 per month – that’s a 32% increase compared to their full retirement age benefits! And over $1,100 of what they would have received at age 62.
Another possible way to get the most out of your social security income would be to utilize spousal payments. If you’re looking to postpone receiving benefits because you want to minimize your taxable income and maximize the amount of benefits you receive later down the road, you can choose to file and suspend payments now until a later date. Please see your investment professional for limitations on file and suspend rules, not everyone qualifies for file and suspend due to the Bipartisan Budget Act of 2015.
By filing now, your spouse then becomes eligible for spousal payments. This strategy works best when one person has a higher earnings history while the other one is younger and has had little or no earnings. If you’re looking to continue working while receiving social security, a factor that we will need to consider is something called the retirement earnings test. The government sets an annual exempt amount that you can earn within a year without having your social security lowered. That exempt amount is increased dramatically when you reach your full retirement age.
And since your social security benefits are calculated from the top 35 years you’ve earned the highest amount of income, you have the potential to increase your social security in the long-run by continuing to work.
There are other strategies to maximize your social security, but there is no one size fits all plan. Some of our clients are better off claiming social security at age 62 while others at 66, or even 70.
What is your Full Retirement Age (FRA)?
The amount of your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.
Your age at the time you start receiving benefits also affects your benefit amount. Currently, the full retirement age is in the process of rising to 67 in two-month increments, as shown in the following chart:
We’ll work together with you and create a blueprint of your optimal retirement age and decide what strategy to take to maximize your social security.
Please contact us and fill out the form to show your interest. We will reach out to you within 24-48 hours to discuss further on our Social Security maximization services.