According to a recent study, only 4% of retirees claim Social Security benefits at the optimal time, losing out on an average of $111,000 per household. There are many things to consider when choosing how to claim your benefit, and there’s no one-size-fits-all formula for maximizing it. Consider your unique situation and read these tips on how to be part of the 4% when it comes to Social Security.
Waiting to Claim Means a Larger Benefit
You can claim Social Security benefits anywhere from age 62 to 70, but the size of your benefit will vary depending on when you claim. In 2021, the maximum monthly benefit for retirees who claim at their full retirement age is $3,148. If you want to claim past your full retirement age, your benefit will increase by 8% per year you defer until age 70 for beneficiaries born in 1943 or after. For those who claimed at age 70, the maximum monthly benefit in 2021 is $3,895.
You May Be Able to Claim a Spousal Benefit
Even if you don’t qualify for your own Social Security benefit, you could qualify for a spousal benefit. If you have reached your full retirement age and have been married for at least one year, you can claim a Social Security spousal benefit worth up to 50% of your spouse’s benefit. You will receive less than 50% of your spouse’s benefit if you claim spousal benefits before your full retirement age, but you will not receive more than 50% by waiting past your full retirement age to claim. If you were married for at least 10 consecutive years, have been divorced for at least two years, and are not remarried, you can still claim a spousal benefit worth half of your ex-spouse’s benefit after you turn your full retirement age.
Your Social Security Benefit Can be Taxed
To figure out if your benefit can be taxed, add up your adjusted gross income, nontaxable interest, and half of your Social Security benefit to get your combined income. If your combined income as an individual is between $25,000 and $34,000 or is between $32,000 and $44,000 as a married couple filing jointly, up to 50% of your benefit may be taxable. And, if your combined income as an individual is over $34,000 or over $44,000 as a married couple filing jointly, up to 85% of your benefit may be taxable.
How Will You Create Additional Retirement Income?
Some retirees have a pension, but many don’t. And even those who do may be offered a buyout and may not know which option to take. We can look at how much you’ll get from Social Security, how much income you need in retirement, and explain options for guaranteed lifetime income if you don’t have a substantial annuity to rely on.
There are countless factors that go into the “when” and “how” when claiming Social Security, and all of those factors relate back to your individual situation. At Networth Advisors, we can help you with the transition from saving to spending and see how your Social Security benefit fits into your overall retirement income plan. Sign up for a complimentary review with us to start the conversation.