Is retirement planning getting you frustrated and confused? Are you wondering if you’ll be able to retire at 65? There are almost 75 million Americans between the ages of 50 and 70, all hoping to afford the retirement of their dreams.
The good news is that there are several ways you can maximize your social security income. We’ll explain how you can increase your social security income benefit and help you get started on your search for a wealth management company.
What Is Social Security?
Social security is a program that started way back in the 1930s. It was designed as an economic “safety net” for older workers, and today there are over 60 million people who receive monthly benefits.
If you have a chronic medical condition that is expected to last more than a year, you may be qualified for social security disability benefits. Most people, however, claim social security benefits when they’re 62 or older.
Social security benefits weren’t designed to cover every living expense, but to provide a cushion that people can fall back on during their senior years. You should start saving as soon as possible and speak with a certified financial planner about your retirement goals.
1. Wait Until Full Retirement Age
While anyone can claim social security income at the age of 62, their full retirement age varies. People born in 1937 or earlier reach their full retirement age at 65, and then the age limit gradually increases.
People who were born in 1960 or later need to wait until 67 to claim their full retirement benefits. The reason you might want to wait several years to sign up for social security is that your monthly payment increases with time.
For example, if you were born in 1940, your full retirement age is 65 years and six months. If you claim benefits at the age of 62, you’ll only get $775 for every $1,000 you’d get if you waited.
If you can, hold off until you reach retirement age – or even longer. Every year you wait after your retirement age will add 8% to your benefits. There isn’t any incentive after the age of 70, though, so you may as well claim benefits by then.
While 8% may not seem like a lot, waiting four years would add 32% to your total benefits. It’s probably worth it to wait, if you can.
2. Claim Spousal Benefits
Another way to increase your social security benefits is to claim spousal benefits. You can’t do this if you’re already receiving benefits, though.
If your spouse earned substantially more than you did during their working years, you could be eligible to receive about half of their benefits. You can receive spousal benefits for several years, wait until you turn 70, and go ahead and make your claim.
You can still claim spousal benefits if you’re divorced, as long as you were married for at least 10 years. If you’ve gotten remarried, you won’t be eligible for those benefits, though.
Talk to your financial planner about the best way to approach claiming social security benefits. You can search for “my social security” and you’ll be directed to the government’s social security website. Once you sign up, you’ll be able to see your work history and your estimated benefit amount.
3. Work at Least 35 Years
Ideally, you would have 35 years or more of income, but not everyone does. There’s a formula that the government uses to calculate your social security income benefit, which seems more complicated than it really is.
For every $1,300 you earn each year, you get one credit. The maximum number of credits you can get per year is four. So to get benefits, you’ll have to work at least 10 years.
If you can work for 35 years or more, your social security benefits will be much higher, of course. The more you work, the more benefits you will receive.
Financial planners will help you figure out how much you’ll need to save to meet your retirement goals. When you start to look for a wealth management agency, look for Certified Financial Planners.
4. Increase Your Annual Income
If you’re nearing retirement age, you should focus on increasing your annual income. If possible, you may want to take on a second job or focus on growing a business online.
After you claim social security benefits, however, you’ll need to watch how much you earn each year. Is social security income taxable? The answer is that it depends upon how much you make.
Basically, if you make more than a certain amount, more than 80% of your social security income could be taxable. Take the time to talk to your wealth management provider about income limits and your plans to work during retirement.
In general, though, you should try to earn as much money as possible before you take your social security benefits. Wealth management professionals can help you earmark funds for your grandchildren’s education, real estate investment, IRAs, and more.
Finding Good Advice About Social Security Income
When it’s time to make decisions about investments and when to apply for social security income, it’s vital to find a good financial planner. Look for referrals from friends, family, or co-workers. You’re looking for a local firm with a good reputation in the community.
Gather together all of your paperwork, and make sure that your income statement is accurate on the social security website. If there are any errors, it’s better to take a few months and get them corrected.
Think about what you want your retirement to be like. Do you want to move somewhere warmer? Are you planning on selling your home or bequeathing it to your children? What would your ideal retirement scenario be?
We work with people of all ages to help them save for retirement. We focus on time-tested investment strategies that will allow you to meet your retirement goals.
You can give us a call or send us an email online. We’re looking forward to helping you and your family develop exciting, long-term plans.