Here’s how to squeeze an extra 24% out of Social Security – Community News
Social Security

Here’s how to squeeze an extra 24% out of Social Security

Social Security is an essential program for older Americans. You may not fully appreciate it yet, but it lifts nearly 10 million people out of poverty and provides 50% or more of the retirement income for more than a third of older beneficiaries. It will probably pay off a lot your retirement income too.

However, you should not just relax and expect to receive whatever Social Security sends you in the future as there are multiple ways you can increase your benefits. It’s well worth it, because otherwise you might be surprised and disappointed at the size of your benefit checks: They recently averaged only about $1,560 a month.

Senior on a laptop, smiling excitedly with arms up.

Image source: Getty Images.

One of the most effective ways to improve your Social Security checks is to postpone them. It can increase your benefits by up to 24%, or even 32% for some people. Here’s a closer look at that strategy.

Your full retirement age is key

First of all, you need to know your ‘full retirement age’ which is 66, 67 or somewhere in between for those of us who are still working. That is the age at which you can start collecting the full benefits to which you are entitled, based on your earnings. However, you can start collecting your benefits as early as age 62 or as early as age 70.

If you start cashing early, before full retirement age, your checks will be smaller (but you’ll get more), and if you delay, they’ll get bigger (but you’ll get fewer checks overall). The table below shows how much of your full benefit you will receive, depending on when you start collecting.

Start collecting at:

Full retirement age of 66

Full retirement age of 67

62

75%

70%

63

80%

75%

64

86.7%

80%

65

93.3%

86.7%

66

100%

93.3%

67

108%

100%

68

116%

108%

69

124%

116%

70

132%

124%

Data source: Social Security Administration.

So to increase your checks by 24%, you would delay the collection of your benefits until three years after your full retirement age. If that age is 66 and you delay for four years, you can raise your checks by even more — by about 32%. Every year you defer, you increase your checks by about 8%.

So when should you start collecting benefits?

Obviously, procrastination can be powerful. But it’s not the right move for everyone. For starters, many people simply cannot afford to put off collecting. Many retire earlier than expected due to job loss or illness, and Social Security income may simply be needed to keep them afloat.

Many others have a decent chance of living shorter than average based on the lifespan of their relatives, and for them, starting collecting early can help them get the most out of Social Security.

Think about your own situation, because you determine when you have to collect your own benefit. If you have many relatives who have lived to be 90 or older, that is a promising sign of your own longevity. If you have sufficient financial reserves to support you while you delay collecting Social Security, or if you enjoy your job and plan to continue working until your 70s, those are good reasons to consider deferring too.

It may also be smart to put it off as long as possible if you are married and have earned significantly more in your working life than your spouse. That’s because when one of the spouses dies, Social Security rules allow the survivor to collect either their own benefits or their spouse’s, whichever is greater. So maximizing your checks means that if your spouse outlives you, they can cash your large benefit checks.

The more you learn about Social Security, the smarter the decisions you can make about it — and the more you can squeeze out of the program overall. You’ve been paying for it for many years — so try to get the most out of it.