Many retirees like having social security benefits as an additional source of income. For other people, however, Social Security may be their only source. Either way it is important to educate yourself on the best way to take social security and maximize the benefit – no matter how significant an income source it is.
If you or your loved one is nearing retirement or already retired, it is important to know all there is to know about the ins and outs of Social Security before you sign anything or fill out applications. Here are three major tips you can apply to maximize your benefits and receive the money you truly deserve:
1. Don’t Receive the Benefits Immediately
There’s nothing wrong with a little delay in receiving the benefit. In fact, it is one of the most efficient ways to maximize the benefits you will receive. It’s actually pretty simple – the longer you wait after you have retired or reached full retirement age, the more money you will receive each month up to a certain point.
The full retirement varies from person to person. It depends on when you were born and the age when you become eligible for a full or unreduced retirement benefit, as defined by the Social Security Administration.
For example, if you were born in the year 1960 or later, your full retirement age is 67 years old. On the other hand, if you were born in 1937 or earlier, your retirement age would be 65 years old. If you or your elderly loved one was born between the timeframes mentioned, you can expect that your full retirement age will be somewhere near these ages. If you want to learn more about retirement ages, you can check up on Social Security Administration’s web page – Retirement Planner: Full Retirement Age.
It is true that you will receive more money from your benefits if you wait a number of years after your retirement age; likewise, the money you’ll receive will be deducted should you choose to receive the benefits before you reach retirement age.
The Social Security Administration published an article about when to start receiving retirement benefits. Let’s say your full retirement age is 68 years old with an assumed benefit of $1,200 per month. If you want to receive Social Security benefits at an early age of 63, your monthly benefit would be reduced to only $850 per month instead of $1,200. On the contrary, if you decided to receive your benefit at the age of 72, you’ll be able to receive $1,520 per month. Good things come to those who wait!
2. Explore Marital Social Benefits
Good news for all married couples! There are more ways to stretch you and your spouse’s Social Security benefit. Here’s how: you can receive benefits based on your own income or you can opt to receive up to 50% of the amount your significant other gets.
This strategy is called a spousal benefit. If you stopped paying Social Security for at least 10 years but your spouse has or if your income is less than your spouse’s, you are eligible to claim a spousal benefit. This is where you can receive up to half of what your spouse receives. However, you can only claim this benefit when your spouse has already retired or filed a disability benefit.
If you have been legally separated from your spouse, you are still able to claim spousal benefits depending on the amount of earnings record of your ex-spouse and given that you are both 62 years old or older and were married for more than 10 years.
Your ex-spouse cannot do anything about this and they do not have to claim Social Security in order for you to make your claim. As long as you have been divorced for the last two years and if you are not currently married, there is nothing to worry about. The benefits you receive will not affect the benefits of your ex-spouse and his/her new spouse.
However, in the event that you remarry, you would not be able to collect the spousal benefit based on your ex-spouse’s income. You will have to remain single in order to continue receiving benefits indefinitely.
3. Invest Your Money to Make More Money
Don’t get sidetracked by the amount of money you receive each month. There is nothing wrong with maximizing the benefits you receive, but on the other hand, don’t close your door on the possibility of investing the money you receive from Social Security to make even more money.
A delay in receiving Social Security benefits in order to receive more is generally a good idea. If you’re one of the people who would not solely rely on Social Security benefits to get by, have you thought about what you are going to do with the money you’ll receive? Where are you going to spend it on? Do you have to spend it?
You may not need Social Security right away, especially when you have a 401(k) or other retirement benefits – pensions and whatnot from your working years. It would be a better option to use other benefits and invest the money you receive from Social Security in preparation for the future. It’s definitely not a bad idea. The money you earn can go to care expenses – assisted living, in-home care, – hospitalization, medications, and other emergencies you may encounter during retirement.
The Social Security Administration website has a life expectancy calculator you can use to get an estimate on how much longer you will live. It may seem a little offensive but it gives you a rough idea. If you have just retired, you might have another 30 years to cover. Let’s face it, 30 years is not a short time and a lot can happen in between. You would want to be financially prepared – not only for your sake but for the people around you as well.
If you plan on investing your Social Security money for your future, you might want to seek help from an experienced financial advisor. They are able to walk you through the process and advise you as to where to invest your money. A reputable financial advisor will suggest you invest your money into conservative investments at par with your goals and risk tolerance.
The bottom line is that you can apply any or every single one of these strategies as they are proven to help you make the most out of your benefit, so you can retire without a worry. To look for a reputable financial advisor, ask for recommendations from people you can trust or search for one near you through the internet. Make sure you do your research before you commit your money to someone.