Receiving a monthly check brings peace of mind to millions of retirees after years of hard work. Even after claiming Social Security benefits, retirees can receive a monthly income based on the Social Security Administration’s (SSA) calculations. There are opportunities and moves some people can make to increase their monthly benefits.
For example, there is a little-known move that retired Americans can use to earn more than $700 per month. If you currently receive Social Security benefits, know more about this simple move that could give you extra money monthly.
Importance
In retirement, most older Americans rely on Social Security benefits. A 2024 Gallup study found that a staggering 88% of current retirees depend on their monthly checks, with 60% citing Social Security as their primary income source. Even with a healthy nest egg, if you live a long life, you run the risk of running out of money.
Therefore, optimizing your Social Security benefits is crucial for long-term financial security. Regardless of your financial situation, a simple method can help the typical retiree increase their monthly benefit by nearly $700.
Timing
One of the most important retirement decisions you will ever make is when to start collecting Social Security. Your monthly payment is directly affected by your age when you claim it. Except for annual cost-of-living adjustments, your benefit amount is fixed once you file. Put another way, the decision you make today will affect your financial situation for the rest of your life.
If you delay until you reach your full retirement age (67 for those born in 1960 or after), you will receive your pension in full, based on your work history. You will receive your entire benefit plus a monthly extra if you wait until you are 70 years old.
Modifications
These modifications can also be substantial and are typically long-lasting. Social Security benefits may be lowered by up to 30% monthly if you claim after age 62. You will receive a bonus of at least 24% each month on top of your total payments if you wait until you are 70 years old.
That can total several hundred bucks a month for the typical worker. The average retired worker receives Social Security benefits of approximately $1,298 per month at age 62, based on Social Security Administration data from 2023. However, by age 70, the average payout is approximately $2,038 per month, which is a $740 monthly difference.
| Age | Monthly Benefit (Average) |
|---|---|
| 62 | $1,298 |
| 70 | $2,038 |
Considerations
How do you know if delaying Social Security benefits is the right move for you? If your funds are not enough or you want to get the most out of your retirement income, waiting until you are 70 years old can be a great decision. However, it will not be the best course of action for everyone, and there are valid arguments in favor of filing early.
For starters, it may make sense to file for early retirement if you have reason to think you will not live into your 70s or beyond. Even though it is not a fun subject to consider, if you are dealing with health problems, filing your claim as soon as possible may allow you to receive your Social Security benefits sooner rather than later.
Spousal Benefits
If your spouse is also qualified for retirement benefits, filing early may be a wise decision, as one can claim early to supplement income in retirement, allowing you to retire sooner without making any financial sacrifices. Delaying Social Security benefits is a prudent choice for retirees looking to maximize their income. Waiting a few years before filing can boost the average monthly income by hundreds of dollars, providing for a more comfortable retirement. This personal decision is influenced by several factors, including health, financial needs, and spousal benefits.
Choosing the right time to file for Social Security benefits is a significant decision that impacts your financial future. While waiting until age 70 can significantly increase your monthly income, it is essential to consider your health, financial needs, and personal circumstances. By carefully evaluating these factors, you can make an informed decision that best suits your retirement goals and lifestyle.
FAQs
How does delaying benefits increase payouts?
Delaying benefits boosts monthly payments by a set percentage.
What age offers full Social Security benefits?
Full benefits are available at age 67 for those born in 1960 or later.
How much can benefits increase by waiting?
Benefits can increase by up to 24% if you wait until age 70.
When can you start claiming Social Security?
You can start claiming at age 62, but with reduced benefits.
What factors should influence my decision?
Consider your health, financial needs, and spousal benefits.