Every month, millions of retirees depend on their Social Security checks to cover living expenses and enjoy their retirement. However, those who rely solely on this income often struggle to meet all their needs, especially towards the end of the month.
Knowing how to maximize your benefits can be crucial for a more comfortable retirement. One particular clause can help increase your payment amounts, but it’s essential to know how benefits are calculated and the resources available to you.
Table of Contents
- 1 How Does the SSA Calculate?
- 2 Increase Checks for Retirees
- 3 Importance
- 3.1 FAQs
- 3.2 How does delaying my Social Security benefits affect my monthly payment?
- 3.3 What is the full retirement age (FRA) for those born in 1960 or later?
- 3.4 Can I withdraw my Social Security claim after I have started receiving benefits?
- 3.5 What happens if I withdraw my Social Security claim using SSA-521?
- 3.6 Are there any limitations to using Form SSA-521?
How Does the SSA Calculate?
Understanding how the Social Security Administration (SSA) calculates your monthly benefits can be confusing. Four main factors determine your Social Security checks:
- Earnings History
- Work History
- Full Retirement Age (FRA)
- Claiming Age
Earnings and Work History
Your monthly Social Security payment is based on your 35 highest years of earnings, adjusted for inflation. Higher average wages over your working life generally result in higher monthly benefits.
Full Retirement Age (FRA)
Your FRA is the age at which you can receive 100% of your monthly benefit. This age varies depending on your birth year. For most of today’s workforce, born in 1960 or later, the FRA is 67.
Claiming Age
Your claiming age significantly impacts your Social Security benefits. You can start receiving benefits as early as age 62, but there is a financial incentive to wait. Your benefit increases by up to 8% for each year you delay taking payments from age 62 until age 70.
Here’s a table showing how delaying benefits can increase your monthly payment:
| Birth Year | Age 62 | Age 63 | Age 64 | Age 65 | Age 66 | Age 67 | Age 68 | Age 69 | Age 70 |
|---|---|---|---|---|---|---|---|---|---|
| 1943-1954 | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% | 132% |
| 1955 | 74.2% | 79.2% | 85.6% | 92.2% | 98.9% | 106.7% | 114.7% | 122.7% | 130.7% |
| 1956 | 73.3% | 78.3% | 84.4% | 91.1% | 97.8% | 105.3% | 113.3% | 121.3% | 129.3% |
| 1957 | 72.5% | 77.5% | 83.3% | 90% | 96.7% | 104% | 112% | 120% | 128% |
| 1958 | 71.7% | 76.7% | 82.2% | 88.9% | 95.6% | 102.7% | 110.7% | 118.7% | 126.7% |
| 1959 | 70.8% | 75.8% | 81.1% | 87.8% | 94.4% | 101.3% | 109.3% | 117.3% | 125.3% |
| 1960 or later | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
Increase Checks for Retirees
Many retirees may regret claiming their benefits early. Fortunately, Social Security offers a do-over provision that can significantly increase your benefits, albeit with some limitations. This is done through Form SSA-521, or the Request for Withdrawal of Application.
SSA-521: A Second Chance
The SSA-521 allows retirees to withdraw their Social Security claim, under these conditions:
- Repayment: You must repay all Social Security checks received, including those of your spouse and children.
- One-Time Process: You can only withdraw your application once.
- 12-Month Window: The request must be filed within 12 months of your initial application.
This provision is especially helpful for those who claimed benefits early due to unemployment but later found work. By withdrawing and delaying your benefits, you can increase your checks by up to 8% per year until you reach age 70.
Importance
Delaying your Social Security benefits can significantly impact your retirement income. By knowing and utilizing the SSA-521, retirees can make more informed decisions, potentially increasing their monthly checks and overall lifetime benefits. This strategy can provide additional financial security and peace of mind during retirement.
FAQs
How does delaying my Social Security benefits affect my monthly payment?
Delaying benefits increases your monthly payment by up to 8% per year from age 62 to 70.
What is the full retirement age (FRA) for those born in 1960 or later?
The FRA for those born in 1960 or later is 67.
Can I withdraw my Social Security claim after I have started receiving benefits?
Yes, using Form SSA-521, but you must repay all benefits received and file within 12 months of your initial application.
What happens if I withdraw my Social Security claim using SSA-521?
Your benefits can increase by up to 8% per year if you delay them until age 70.
Are there any limitations to using Form SSA-521?
Yes, you must repay all benefits received, it’s a one-time process, and must be done within 12 months of your initial claim.