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How to give your Social Security benefit a 32% raise

by Susan Wright | Contributor
November 2, 2019

Summary: While most workers will be entitled to Social Security (or Social Security spousal) benefits when they retire, many are not aware that by making just a few changes in terms of how or when this income stream is started, it can make a substantial difference in the total amount that is received over time.

There are literally thousands of combinations of ways that you can take your Social Security benefits in retirement – and oftentimes, the difference between a good decision and a not-so-good decision can amount to $100,000 or more in benefits that you receive (or don’t receive) over the course of your lifetime.

For many years, the age at which eligible individuals could receive Social Security retirement benefits was 65. However, in the early 1980s, the “Full Retirement Age” was changed in order to help keep the Social Security program financially solvent. Now, Full Retirement Age for Social Security can be anywhere between 65 and 67, depending on the year you were born.

Year of Birth Minimum Retirement Age for Full Benefits

1937 or Before

65

1938

65 + 2 months

  1939
  

  65 + 4 months
  

1940

65 + 6 months

  1941
  

  65 + 8 months
  

1942

65 + 10 months

  1943 to 1954
  

  66
  

1955

66 + 2 months

  1956
  

  66 + 4 months
  

1957

66 + 6 months

  1958
  

  66 + 8 months
  

1959

66 + 10 months

  1960 or After
  

  67
  
Social Security Full Retirement Age Source: Social Security Administration

The good news is that you don’t have to wait that long to start taking your Social Security retirement benefits. In fact, eligible recipients can begin this income as early as age 62. If, however, you start your benefits before your Full Retirement Age, the dollar amount will be reduced – and this reduction will be permanent.

Conversely, if you wait until after you have reached your Full Retirement Age to begin your Social Security retirement income, you can actually give yourself a “raise.” Due to the concept of delayed retirement credits, you will receive an increase of 8% in the dollar amount of your benefits for each year you wait. So, the longer you wait, the higher your benefit amount will grow.

This increase will also be permanent – and it can make a tremendous impact on the amount of money you receive each month, as well as the total amount of Social Security retirement benefits you collect.

As an example, let’s say that your Full Retirement Age (FRA) for Social Security retirement income is 66, and the amount that you would receive if you started taking your benefit at that time is $2,000 per month.

By waiting four years to start receiving this income, though, you can increase the dollar amount by 8% each year – up until you reach the age of 70. (Note that you can continue to delay the receipt of your Social Security retirement benefits past age 70, however, the delayed income credit will not continue to increase.)

So, by waiting the extra four years to start taking your Social Security benefits, you can essentially give yourself a 32% raise…and that doesn’t even include any additional cost-of-living adjustments!

What other benefits does social security offer?

Although most people know that Social Security provides a retirement income benefit, this program actually offers both income and a financial “safety net” in other situations, as well. For instance, for those who have paid taxes into the system – and who have also accumulated enough Social Security eligibility credits – there are a number of benefits that you and / or your spouse and dependents may be entitled to, such as:

  • Disability Income – Social Security will pay benefits to a qualified worker (as well as to his or her dependents), if the worker has been deemed by the SSA (Social Security Administration) as being disabled and not able to work.
  • Spousal Benefits – Even if the spouse of a qualified Social Security recipient has never worked outside the home, he or she could still be eligible to receive Social Security spousal retirement benefits. (Ex-spouses may also be eligible, based on their former spouse’s work record, provided that certain criteria are met, including that the marriage lasted at least ten years, and the ex-spouse who is filing has not remarried).
  • Survivors’ Benefits – Social Security survivor’s benefits may be paid to the spouse, child, and / or parent of a qualified worker who passes away.
  • Dependent’s Benefits – Within a family, a child can receive up to half of a parent’s full retirement or disability benefit, provided that they also meet certain eligibility parameters.

Will you have a stream of guaranteed income for the remainder of your life?

If you qualify for Social Security, you can count on a steady stream of income for the remainder of your lifetime. But it still may not be enough to help you maintain your current lifestyle. With that in mind, the best Social Security retirement income strategy is the one that works for your specific short- and long-term financial objectives, and that can also be integrated with other future income sources.

Alliance America can help

An Alliance America financial advisor can assist you in maximizing your retirement resources and help achieve your retirement goals. Alliance America’s planning process is focused on personalized retirement income planning. As fiduciaries, our advisors are required to act in your best interest, and we are dedicated to helping you achieve the retirement lifestyle you seek. You can request a no-obligation consultation by calling 888-864-2542 today.

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