You may not get to choose exactly how much you want to get from Social Security every month, but you actually do have quite a bit of control over the size of your checks. Unfortunately, too many people settle for small benefits because they don’t understand the factors that influence the size of their checks in the first place. Here are five of these factors to keep in mind, along with tips on how you can leverage this knowledge to maximize your Social Security benefit.
1. Your salary
Your Social Security benefit is based on your salary during your working years. A larger income typically leads to larger benefit checks, but this isn’t the case for those who earn more than $147,000 in 2022. That’s the maximum income subject to Social Security taxes, so earning more won’t boost your benefit.
But as long as you’re under this threshold, anything you do to increase your income today will also help your Social Security checks later. You could try starting a side hustle, negotiating a raise, or switching companies if you find another employer willing to pay you more.
2. How many years you’ve worked
The government only looks at your income from your 35 highest-earning years when calculating your Social Security benefit. For those who don’t work at least 35 years, it includes zero-income years in their calculation. This brings their benefit amount down considerably.
Whenever possible, you should aim to work at least 35 years, but you don’t have to stop there. Working longer often increases your benefit, because most people earn more later in their careers than when they were young. After they pass the 35-year mark, their higher-earning years begin to replace their lower-earning years in their benefit calculation.
3. Your birth year
The Social Security Administration assigns everyone a full retirement age (FRA) based on their birth year. If you were born between 1943 and 1954, your FRA is 66. Then, it rises by two months every year thereafter until it reaches 67 for those born in 1960 or later.
You must wait until your FRA if you want to claim the full benefit you’re entitled to based on your work history.
4. Your claiming age
You can claim benefits as early as 62 rather than waiting for your FRA, but doing so shrinks your checks. You’ll only get 70% of your full benefit per check if your FRA is 67 and you claim at 62. Those with a FRA of 66 get 75% of their full benefit per check if they claim as soon as they’re eligible.
Every month you delay benefits boosts your checks a little, and this continues past your FRA until you turn 70. That’s when you qualify for your largest benefit. You’ll get 124% of your full benefit per check if your FRA is 67, or 132% if your FRA is 66.
5. Your life expectancy
Your life expectancy plays a big role in how much you get from Social Security overall and in the ideal time for you to sign up. People with longer life expectancies typically get more money by delaying Social Security, while those with short life expectancies often prefer to sign up right away at 62.
It’s ultimately your call when you sign up for benefits, and there are other factors to weigh, like your ability to pay bills without Social Security checks. But you should definitely keep your life expectancy in mind when deciding on your claiming age.
Putting it all together
You may not be able to change all the factors listed here, but by understanding how they come together to influence your Social Security checks, you can make better decisions that will get you the most money possible.
Review the factors above and keep an eye out for any opportunities to increase your benefits. Choose a tentative claiming age as well. But don’t feel like it’s set in stone. You can always adapt your Social Security strategy as you go.
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