Tips on How You Can Maximize Your Social Security Benefits


Most people dream of an easy retirement – one that will have them set for the rest of their lives. However, this dream would be impossible to achieve if you do not start planning your retirement early. This is especially true for your Social Security benefits.


The benefits you are going to get from Social Security will play a crucial role in your retirement income. This is because it is assured income, which will help you become financially independent upon reaching your full retirement age, which ranges from 62 to 70 years old, depending on where you were born. But the amount of money you are going to get as monthly pension will be dependent on your contributions and the age at which you will start making your claims.


Although paying for your Social Security can a put a dent in your budget, the benefits you can get in the end will all be worth it. To ensure that you’ll be able to make the most of the money you have put aside for your retirement, here are some tips you can use.


  1. Delay your Social Security benefits claim until your 70 years old.


The longer you wait to claim your benefits, the higher your income will be. If this is something that’s financially possible for you, it would be best to delay the start of your retirement check until you’re 70 years old. The value of your retirement income will increase each year. If you were born between 1943 and 1954, you’re FRA (full retirement age) would be 66, which will insure a $15,000 annual benefit if you make your claim when you reach 62. But if you start collecting your check at 66, you will receive $20,000 in annual benefits. But if you work until 70, you will get $26,400 annually.


  1. Take advantage of spousal benefits.


Married couples can maximize their Social Security benefits and earn a higher income upon retirement. As you and your spouse reach the age of 62, one of you can claim spousal benefits and get 50% of your wife or husband’s monthly benefit, if his or her benefits are higher than yours. So, if your partner will receive $30,000 in annual Social Security income, you will get $15,000 from it, increasing your household’s income. This will be higher if you delay your check and put a hold on your payments until your FRA. By doing so, you can increase your income through your spouse’s benefits while ensuring that you’ll receive a higher amount by the time you retire. But if the higher-earning spouse files for retirement early, he or she will get a lower benefit amount. This also means that when that spouse dies, the survivor will receive a lower benefit.


There are other tactics on which you can maximize your spousal benefits. Speak to an expert financial advisor to ensure you’ll be able to decide which method will work best for you and your partner.


  1. Learn everything about survivors benefits.


If a deceased person has worked long enough with Social Security, his or her survivors may be entitled to benefits. A widow or widower who is 60 or older, he or she may be eligible to receive 100% of your benefit amount. For surviving spouses who are caring for the deceased’s child who is under 16 years old or is disabled, they will receive 75%. Children who are under 18 and are still unmarried or are disabled, may also claim 75% of the benefit amount. Parents of the deceased who are 62 or older and were mainly dependent on the deceased may also qualify. Under certain circumstances, adopted children, grandchildren, stepchildren and surviving divorced spouses could also be entitled to monthly benefits from the deceased’s Social Security income.


It should also be noted that there are certain limits or factors that affect the benefits a deceased’s survivors will receive. For one, if the surviving spouse remarries before reaching age 60, they will no longer be able to receive the monthly benefits while still married. But if the survivor remarries after turning 60, he or she will still be able to qualify for Social Security benefits.


  1. Understand tax implications on Social Security benefits.


There are people who will be required to pay federal income taxes on their Social Security benefits. But only if you have sources of income other than your benefits, including profit from a business you own, interests, dividends, wages and other taxable income which is reported in your income tax return. Based on IRS (Internal Revenue Service) rules, you will not pay more than 85% on federal income taxes on your Social Security benefits. You will have to pay up to 50% of your benefits if your combined income is between $25,000 and $34,000. If you earn more than that, you will be required to pay up to 85% of your benefits. If you and your spouse have filed a joint return, and have a combined income between $32,000 and $44,000, you will pay taxes on up to 50% of your benefits. Up to 85% of your benefits will be deemed taxable if you and your spouse earn more than that.


To reduce payable taxes, you will need to manage your income. If you have a business, for example, and you are looking to sell it upon retirement, financial experts advise that it is best to structure the sale in way that you will receive your earnings in a staggered manner. If you have large shares in a company, avoid selling all of them altogether. This is to minimize the impact of taxes to your finances in a year.


It helps to speak to a financial expert about your Social Security benefits to ensure that you are making a sound decision. That way you can be assured of maximizing your income when you retire.



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