Most people think that there isn’t much they can do about the size of their future Social Security retirement checks – but that’s not true! Depending on your situation, there are several ways to boost your benefits that few people know about. Here’s what they are and how they work.
Waiting Strategy
The most common strategy people use to increase their benefits is to delay taking them. While workers can start collecting their Social Security retirement benefits as early as age 62 (and most do), postponing them to full retirement age (which is 66 if you were born between 1943 and 1954), or better yet to age 70, can make a big difference. Let’s say, for example, that you’re eligible for $1,000 monthly benefit at age 62. By waiting to 66 your monthly benefit would increase to $1,333. And by waiting to age 70, you would boost your benefit a whopping 76 percent to $1760. Waiting beyond age 70 will not increase your benefits.
I do, however, want to add that if you’re strapped for cash or in poor health and don’t expect to live much past your mid-70s, you’re better off collecting early benefits. See www.ssa.gov/estimator to calculate your benefits at different retirement ages.
Strategies for Couples
In addition to delaying benefits, there are two strategies that can help married couples too. The first one is called “file and suspend” – part of the Senior Citizens Freedom to Work Act of 2000. It allows a worker to “file and suspend” Social Security benefits once he or she has reached full retirement age. Under this law, the higher-earning spouse (usually the husband) could file for benefits, allowing his wife to collect her share, and then suspend his own benefits while continuing to work and building a bigger payment for the future.
Another benefits-boosting option few people know about is the “claim now, claim more later” strategy. This option lets you draw on your spouse’s Social Security benefits (once you reach full retirement age), while delaying the start of your own benefits. Here’s how it works: Let’s say that you and your wife are both 66. You’re still working and you’d like to delay collecting benefits based on your own earnings record until you’re 70. Your wife can collect full benefits based on her work record – and you can collect a spousal benefit which is half of what she gets. Then, once you reach 70, you stop receiving the spousal benefit and switch to your own benefit, which will be 32 percent higher than the benefit you would have collected at your full retirement age.
Borrow and Invest Strategy
This is an option for wealthier retirees with other sources of income. How this works is you start collecting early Social Security benefits as soon as you retire, and you save and invest that money. Then at age 70, you file a withdrawal application form 521 at your local Social Security office and pay back the benefits that you’ve received, with no interest or adjustment for inflation. Then you reapply for Social Security, claiming a larger monthly check based on your older age. And, you keep the profits you earned from the benefits you invested. For more information see www.ssa.gov/retire2/withdrawal.htm.
Family Boosters
Having children under age 19 who are still in high school can also boost your benefits. Each dependent child is entitled to benefits worth up to half of what you’re collecting. And if any child is younger than 16, your spouse can also qualify for additional benefits as a caregiver.
To learn more about these options visit www.socialsecurity.gov or call 800-772-1213.
