This year, the Social Security benefit program will turn 82 and it is still one of the biggest sources of income for those who have retired. Although there are always concerns that Social Security will no longer exist by the time people who are in their early 20s retire, the program will more than likely still exist for another 82 or more years. However, as many retirees have learned, Social Security income is already not enough to meet regular household expenses and this problem is expected to get worse as Baby Boomers retire, reducing the amount of money added to the program. There are ways that you can maximize the amount you receive in Social Security when you retire and the earlier you start using these tips, the better increase you will see.
Work for 35 Years
When Social Security determines your benefits, they calculate them based on the 35 years of your career in which you earned the most money. If you have not been employed for at least 35 years, the program averages zeros for the years you did not work which lowers your payment. For each year beyond 35 you work, the more your benefits will increase as lower paying years drop out of the formula.
Increase Your Salary
Because Social Security benefits are based on your highest years of income, the more you make, the higher your benefits will be. Taking on a second job or moving into a new job with higher income will increase how much you will receive when you reach retirement age.
Wait Until You Reach Full Retirement Age
If you were born in 1954 or later, retirement age is 67 while for those born earlier, retirement age is 66. However, anyone is eligible to sign up for Social Security starting at age 62 but there is a penalty for taking early benefits. If you are eligible to retire at 66, your reduction in benefits if you retire at 62 is 25 percent. If you are eligible to retire at 67, the reduction is as high as 30 percent. The reduction continues for as long as you collect Social Security. If you really want to retire at 62, use savings or other funds to bridge the gap until you reach full retirement age.
Delay Retirement Until Age 70
There is no rule that says you must retire at 66 or 67. In fact, after you reach full retirement age, your monthly payments will increase by 8 percent for each year you remain employed up until you reach 70. Once you reach 70, there are no increases and no additional benefit to delaying your benefits.
Financial advisers and other retirement professionals like Todd East Attorney at Law also suggest claiming spousal benefits as a way to increase your Social Security payments. The fact is that the more you earn, the higher your benefits will be so increasing income is the best way to ensure that Social Security will provide you additional income in your retirement.