How To Give Yourself a Social Security Raise

Social Security just celebrated its 76th birthday. Despite the lack of cake and streamers, this financial assistance program continues to be the number one source of retirement income for Americans. But did you know that there are steps you can take to increase your Social Security benefits? Follow the proper path and you can give yourself a pay raise during your retirement years. Here’s how:

Work for 35 years or more. You may not be aware of this, but Social Security payments are calculated based on the 35 work years during which you earned the most money. This means that if you did not work a full 35 years, the SSA will use zeros for the years that you are short of the thirty-five. This could drastically reduce your benefit. Higher earning years later in your career will replace lower years if you work for more than the minimum thirty-five.

Earn more. This seems obvious but is still worth mentioning. By taking a second job and earning more now, you will increase your benefit when you start collecting Social Security income.

Wait until your full retirement age. If you sign up to receive Social Security benefits prior to age 66, your monthly payments will be permanently reduced. Remember, you do not need to claim Social Security immediately when you retire. If you have a vehicle such as an annuity that supplements your income from retirement until age 66 or 67, you can maximize your Social Security benefit

Delay claiming until age 70. Carry that annuity for 4 more years, until you hit age 70, and then apply for Social Security benefits. Doing so will increase your monthly payments about 8% for every year you wait! Note** There is no benefit for delaying past age 70 so work with your financial advisor on a plan to get you to your 70th birthday.

Don’t earn too much in retirement. Social Security benefits can be decreased for individuals who are earning income while receiving SS benefits. If you plan to hold a job and collect Social Security at the same time, you will definitely want to speak with a professional who can help you determine a “safe” amount of earnings that will not jeopardize your benefits. Rules and limits changes frequently so make sure you stay up to date with current Social Security policies.

Minimize Social Security taxes. Depending upon your retirement income, Social Security benefits may be taxable at different levels. A small increase in your annual income could mean that you go from being taxed on 50% of your SSI to being taxed on 85% of your SSI. Proper preparation and education can help you avoid this situation.

Sign up for direct deposit. You can avoid fees, not to mention get your Social Security payments faster, if you have them directly deposited into your bank account. New Social Security recipients do not have the option of receiving paper checks but existing recipients have until March 1, 2013 to get on an electronic payment schedule.

Make sure your work counts. You can now view your Social Security statements online. It’s important to review your statement and make sure that your earnings history is accurate and that the taxes paid to Social Security have been recorded properly. Bottom line- make sure you are getting credit for everything you have paid into the system
Get help. Social Security rules and regulations are not always as straight forward and easy as one might assume. Make sure you are prepared by contacting an experienced financial advisor if you have any questions or concerns about your Social Security situation.