People who retire with millions of dollars in savings may not care all that much about what Social Security pays them. But if you know you’ll be heavily reliant on those benefits to get through your senior years, then it’s important to score as high a Social Security paycheck as possible.
There are different steps you can take during your career to snag a higher benefit. Fighting for raises, for example, could be your ticket to more money since Social Security calculates benefits based on workers’ individual wage histories. But if you really want to do your part to snag a more generous retirement benefit, you’ll need to do one thing — be patient.
When waiting pays off
You’re entitled to your full monthly Social Security benefit based on your earnings history once you reach what’s known as full retirement age, or FRA, which depends on your year of birth, as follows:
Year of Birth
Full Retirement Age
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
1960 or later
You’re allowed to sign up for Social Security outside of FRA. In fact, you’re free to file as soon as you reach the age of 62. But for each month you claim benefits early, they’ll be reduced on a permanent basis.
The flip side is that for each month you delay your Social Security filing beyond FRA, your benefits grow a little bit. Hold off on filing for a full year past FRA, and you’ll score an 8% boost to your benefits.
The credits you accrue for delaying your filing stop accumulating once you reach the age of 70. But if your FRA is 67 and you wait to sign up for Social Security until your 70th birthday, you’ll boost your benefits by 24% — for life.
Patience is key
Many people rush to claim Social Security as soon as they’re able to. And to be clear, that’s not necessarily a poor choice. Some people take the attitude that if they’ve saved a lot of money in an IRA or 401(k) plan, they’re free to file for benefits early and get that money sooner, knowing they have a healthy nest egg to fall back on.
But if your goal is to get as much money as possible from Social Security, you’ll need to exercise patience and hold off on filing as long as you can. In fact, you may need to delay your retirement altogether to make that happen. But the upside is that once you lock in that higher benefit, you can look forward to it throughout retirement.
It’s hard to say the same thing about savings because the reality is that market conditions could deal a blow to your nest egg, leaving you with access to less money than expected. And if your nest egg isn’t all that robust to begin with, you might deplete it relatively early on in retirement.
Boosting your Social Security benefit is a great way to line up a higher income stream for life, so it may be worth adjusting your retirement plans to make that happen.
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