Since working people pay into the Social Security system through payroll taxes over the course of their careers, they should receive the most benefit possible from this system. Depending on your financial situation, retirement can consume up to 80% of your annual salary. For many people, Social Security is an essential financial lifeline. You might be entitled to more than you realize.
Find out how to get the most out of your benefits package using these strategies.
Verify your income statement
Make sure that your earnings have been properly credited on your Social Security earnings record, as this is what will be utilized to compute your benefits.
Think about putting off filing a claim
There is a compounding rise in your benefit beginning at age 62 and continuing until you reach age 70. This establishes the groundwork for the lifetime benefit payments you’ll receive. Be aware that the year you were born determines your FRA.
Continue working, even for a year or two
Your benefits will be prorated based on the highest 35 years of your earnings history. If you don’t meet the requirement, all years in which you didn’t earn any money will be replaced by 0.
You may work longer to make up for any 0s or take full advantage of your peak earning years. These two methods can help you get better lifetime benefits.
Obtain spousal benefits
If you are married, you are eligible for either your own benefits or 50% of your spouse’s benefits at FRA, whichever is higher.
Remember to include your ex-spouse.
It’s possible to benefit from your ex-salary spouse’s history if you were married for at least ten years before filing for divorce and are still single. You must be at least 62 years old and receive a less payout than you would have received based on your ex-salary spouse’s history.
Recognize the importance of income earned
To the extent that you work while receiving Social Security benefits and earn more than the IRS income limit before you reach your FRA, your benefit will be cut by $1 for every $2 over the limit. When you reach your FRA, your benefits will be reviewed and possibly adjusted.
Reduce or avoid your tax burden
If you earn significant income from other sources (such as wages, interest, and dividends), the federal government may tax a portion of your Social Security benefits as ordinary income. Assess your situation annually and talk to a tax professional if your income or wages exceed the provisional thresholds.
When it comes to saving for retirement, Social Security payments are essential. More compensation could be due to you than you now realize. It is possible to increase the amount of money you receive each month once you begin collecting retirement benefits by using a mix of the following tactics.
- Strategic Planning Pitfalls: Lessons from Assessing Past Performance - September 25, 2023
- Navigating the Future: Crafting a Three-to-Five-Year Strategic Vision - September 24, 2023
- The CFO’s Crucial Role in Strategic Planning: Beyond the Numbers - September 24, 2023