Social Security Recipients Could Boost a $1800 Monthly Benefit to $2232 With One Change

Social Security Recipients – Every dollar of their monthly payment counts for millions of Americans who depend on Social Security for a substantial share of their retirement income. Annual cost-of-living adjustments help keep benefits in line with inflation, but there’s another approach that can enhance monthly payments by a far larger amount. There is a choice to be made in collecting benefits that has long-term repercussions for many retirees’ financial security. It may take patience to wait longer to begin collecting Social Security, but the monthly payouts might be significantly larger for the rest of a retiree’s life.

One Change Could Turn $1800 Monthly Benefit Into $2232

For Social Security retirees who are currently receiving roughly $1,800 a month, waiting to collect retirement benefits may increase the amount to around $2,232. Workers who are eligible but do not file at full retirement age can obtain delayed retirement credits by delaying filing until age 70. If you wait to claim benefits until after your full retirement age, these credits will increase your monthly income by around 8 percent for each year you postpone claiming, up to age 70. Everyone doesn’t have to wait to claim their benefits, but it’s one of the greatest ways to maximise lifetime income from Social Security.

How Delaying Your Claim Increases Your Monthly Benefit

The boost comes from delayed retirement credits from the Social Security Administration. Once you reach full retirement age, the early-filing reductions no longer apply. If they go past that time, their monthly benefit keeps increasing until they hit 70.

For example, if your full retirement age benefit is $1,800 a month, you may get roughly $2,232 if you delay a few years before starting to receive benefits. That’s a 24% increase, based on the individual’s actual age of retirement and earnings history.

This increased monthly benefit is paid for life. The higher payment amount is also used to determine future yearly cost of living increases, which can increase retirement income even more over time.

Sources : Yahoo Finances

Who stands to gain the most by waiting?

Most people are better off waiting on Social Security if they expect to enjoy a long retirement. Often, individuals make up for the income they gave up by delaying claiming their benefits because they obtain larger monthly payouts for more years.

The biggest beneficiaries are probably going to be:

• Healthy workers live longer.
• People have other retirement savings to pay debts before they claim
• People working after the age of complete retirement.
• Individuals wanting to enhance survivor benefits for a spouse.

Everyone’s retirement is different. You should only claim benefits when you really need the money financially

When Waiting Isn’t Wise

Waiting means higher monthly payments, but it isn’t the right move for everyone. Some retirees have to begin Social Security payments immediately after they stop working. Others may have health or family problems that make it more practical to take it sooner.

If you claim benefits early, before your full retirement age, your monthly amount will be reduced permanently. But for people expecting to live a shorter life or who have saved less for retirement, the benefits may be worth more overall if they are received sooner.

The choice has to balance the need for cash today against the expected earnings in the future.

What is Your Full Retirement Age?

Your retirement age is based on the year you were born. For many today’s retirees it’s 66 to 67 years. If you claim benefits before your full retirement age, you’ll receive a permanently decreased monthly payout.

You can either begin collecting benefits at your full retirement age or wait until age 70 to earn additional retirement credits. Also, after you reach age 70, you don’t earn any more delayed retirement credits, which is why many financial advisers recommend taking your benefits at that point to maximise your monthly payments.

Other Factors That Can Affect Your Social Security Benefits

What a person says is only part of the Social Security calculation. Retirement benefits are also paid monthly, and are based on a variety of other criteria.

How much you can earn over a lifetime, based on your Social Security tax payments:

• The first 35 years of your wage income.
• Your age to start benefits.
• Annual COLAs
• Some limits on working while taking early retirement benefits.
• The exact amount of benefits will vary from worker to worker based on the worker’s earnings record.

Planning for retirement income in the long run

Before retiring, Social Security was created to replace some of a worker’s earnings. Many financial counsellors recommend combining Social Security with employer-sponsored retirement programmes , personal savings , pensions and investment income .

“People close to retirement should determine future expenses, health care costs, housing needs and inflation before deciding when to start taking benefits. They can give you more guaranteed money every month which can significantly aid you late in retirement when costs of living are only going to go higher

You also should coordinate claiming strategies between spouses because when one spouse claims can affect survivor benefits. The survivor can often increase the amount available by delaying the benefit of the higher earner.

Final Thought

Social Security recipients who would be eligible for a monthly payment of $1,800 at their full retirement age could boost that amount to almost $2,232 a month with delayed retirement credits by waiting until age 70 to retire. And that boost continues indefinitely, and can also add to higher future cost of living hikes. But the best approach for you to claim depends on your own circumstances your health, your financial resources, how long you expect to live and what you want to do in retirement.