Did you know there’s a strategy that could boost your Social Security benefits by over 24% in just three years? On average, retired workers receive around $1,900 per month, which totals about $22,980 annually. While this helps cover some expenses, it’s often not enough for a comfortable retirement. But, there’s a way to increase your monthly benefits by $460 – though it’s not for everyone.
Benefits
First, it’s crucial to understand how the government calculates Social Security benefits. The process starts with determining your Primary Insurance Amount (PIA), which is based on your average monthly earnings over the 35 years you earned the most, adjusted for inflation. Your PIA is the benefit amount you’ll receive at Full Retirement Age (FRA), which in 2024 is between 66 and 67 years old. However, many seniors choose not to claim their benefits at FRA.
Claiming benefits before reaching FRA can reduce your benefits significantly. For example, if you claim 36 months early, you could lose nearly 6.7% annually. Deciding when to claim is crucial as it directly impacts your future monthly payments.
How to Increase
One effective way to increase your Social Security benefits is by delaying them beyond your FRA. For each month you delay, you earn an additional two-thirds of one percent, or 8% annually. This means that delaying benefits until age 70 can increase your payments by up to 24%.
If you were eligible for the average monthly benefit of $1,900 at FRA, delaying until age 70 could increase your payment by $460 per month. However, this strategy comes with trade-offs. Delaying benefits means you’ll need to support yourself without Social Security for a longer period, which might not be feasible for everyone.
Weighing the Trade-offs
Delaying benefits isn’t always a smart move for everyone. If you have health issues or financial constraints, you might need to claim benefits earlier. Additionally, if you don’t expect to live into your 70s, delaying benefits could reduce your lifetime total benefits. People who anticipate a shorter lifespan generally receive more by claiming benefits as early as possible.
What If You Can’t Delay?
For those unable to delay benefits due to health or financial reasons, there are still ways to increase your benefits slightly. For instance, claiming benefits at age 63 instead of 62 can add an extra $8 to $13 to your monthly payments. Delaying by even a month beyond your first expected claiming date can also lead to a higher check.
Ultimately, your decision should be based on your life expectancy and financial situation. If you can afford to wait, delaying benefits could provide a significant boost to your monthly income.
FAQs
What is the best age to claim Social Security benefits?
The best age varies based on your financial situation and health. Generally, delaying until age 70 maximizes your benefits.
How much can delaying Social Security benefits increase my payments?
Delaying benefits beyond your Full Retirement Age (FRA) can increase your payments by up to 24% if you wait until age 70.
Can everyone benefit from delaying Social Security benefits?
No, not everyone can benefit. Those with health issues or financial constraints may need to claim benefits earlier.
How does the Primary Insurance Amount (PIA) affect my benefits?
Your PIA is the amount you’ll receive at FRA, calculated based on your highest 35 years of earnings adjusted for inflation.
Is it worth delaying benefits if I don’t expect to live long?
If you have a shorter life expectancy, it might be more beneficial to claim Social Security as soon as you’re eligible.
