New Rules to Receive $3,822: Social Security Full Retirement Age, New Rules

Knowing the nuances of Social Security can significantly impact your retirement planning. As of July 2, 2023, new rules are in place regarding the Full Retirement Age (FRA), which affects how much you can receive. Let’s look into these changes and how you can maximize your benefits, potentially earning up to $3,822 per month in 2024.

New Age Rules

Born in 1957: FRA is 66 years and 6 months.
Born in 1958: FRA is 66 years and 8 months.
Born in 1959: FRA is 66 years and 10 months.
Born in 1960 or later: FRA is 67 years old.

Your birth year is crucial because it determines when you can claim full benefits. Those who file at 65 receive significantly less compared to those who wait until 67.

Calculating Your Benefits

To earn $3,822 per month, you need to meet specific criteria regarding your earnings history. Here’s a step-by-step guide:

1. Determine Your AIME

Index Earnings: Adjust your earnings before age 60 to account for wage changes.
Select Top Years: Choose the 35 highest-earning years.
Calculate AIME: Sum these years’ indexed earnings and divide by 420 (35 years x 12 months).

2. Calculate PIA

Using the PIA formula for 2024:

90% of the first $1,174 of AIME.
32% of AIME from $1,174 to $7,078.
15% of AIME over $7,078.

3. Adjust Based on Retirement Age

Before FRA: Benefits reduced (e.g., 30% reduction at age 62 in 2024).
After FRA: Benefits increased up to age 70 with delayed retirement credits.

4. Use the Online Benefits Calculator

SSA Website: Enter your earnings history for an estimate.
My Social Security Account: Provides the most accurate estimate linked to your actual earnings record.

Strategies

If possible, delay claiming Social Security until age 70 to maximize your benefits. This strategy increases your monthly payments substantially due to delayed retirement credits.

Enhance Your Earnings

Work Longer: Extend your career to replace lower-earning years with higher-earning ones.
High-Paying Job: Seek better-paying employment to boost your contributions to Social Security.

Maximize Retirement Savings

401(k) and IRA Contributions: Maximize these retirement accounts, especially if your employer offers matching funds.
Diversify Income Sources: Combine Social Security, pensions, and annuities to create a stable income stream.

Manage Withdrawals Wisely

4% Rule: Start by withdrawing 4% of your retirement savings annually, adjusting for inflation.
Adjust for Market Changes: Be flexible with your withdrawal strategy based on economic conditions.

Consider Part-Time Work

Working part-time in retirement can provide additional income and delay the need to tap into your retirement savings. Plus, it offers social benefits and the opportunity to defer Social Security benefits for higher future payouts.

Maximizing your Social Security benefits requires careful planning and understanding of the FRA rules. By calculating your AIME, knowing the PIA formula, and strategically planning your retirement, you can potentially achieve the maximum benefit of $3,822 per month. Additionally, enhancing your earnings and delaying your retirement can significantly boost your overall retirement income.