Several important factors determine the amount of Social Security benefits you receive each month, and one of the most significant factors is when you choose to claim your benefits. Claiming earlier results in a smaller benefit, while waiting until you reach the maximum benefit age of 70 can increase your benefits by up to 77%. If you regret claiming benefits early, there is a strategy that can potentially boost your monthly benefit by as much as 28%.
Understanding the Factors that Affect Your Social Security Benefit
When you apply for Social Security retirement benefits, the government looks at your earnings history, birth year, and the age at which you claim benefits. Your earnings are adjusted based on the standard of living, and the 35 highest years of earnings are averaged to calculate your primary insurance amount (PIA). The PIA is the benefit you receive at full retirement age.
Maximizing Your Social Security Benefits
Delaying your benefits until age 70 can increase your benefits by 24% to 32% depending on your birth year. Even if you claimed early, you can still collect delayed retirement credits to boost your benefits. If you've already started collecting benefits but want to increase them, you can suspend them and accrue delayed retirement credits. Each month you suspend benefits, you'll receive two-thirds of a percentage point increase.
Important Considerations Before Suspending Benefits
Before suspending benefits, consider if anyone is collecting benefits on your record and if you are on Medicare. If you suspend benefits, those collecting benefits on your record will no longer be eligible, and you will be responsible for paying Medicare Part B premiums out of pocket. However, suspending benefits can result in a significant increase in your monthly checks, ranging from 24% to 28%, depending on your birth year.
Boosting Your Retirement Income
By strategically suspending your benefits, you can significantly boost your income in the later years of retirement. Planning ahead and understanding the impact of delaying benefits can result in a substantial increase in your Social Security checks. Consider the potential benefits of suspending your benefits to maximize your retirement income for a more financially secure future.