Matt Wiley | DEC 14, 2018
Approximately 67 million Americans received Social Security benefits in 2017, according to the latest numbers from the Social Security Administration. Here’s how to make sure you get the maximum benefit possible in retirement.
1. Work For At Least 35 Years
The government calculates your final benefit amount based on your lifetime earnings, averaging your salary over the course of the 35 years when you made the most. Since salaries change over time, the SSA refers to the Average Wage Indexing Series, but factors in zeros for every year you are short of the 35-year mark.
2. Work Until Full Retirement Age
The SSA clearly indicates that, aside from extenuating circumstances, the earliest anyone can retire to start receiving Social Security is 62 years old, and they lose 30% of the benefits for that year. For each year leading up to the age of 66 the amount deducted is lowered, based on an individual’s year of birth.
3. Don’t Claim Until You’re 70
Your benefits at age 62, 66 or 67 are not your maximum benefits. Each year after full retirement your payout increases by a certain percentage based on certain criteria. We recommend holding off until you are 70 — when payments will be the highest possible.
4. Avoid Social Security Tax Traps
Anywhere from 50% to 85% of your payout can be subject to federal taxation. When the sum of your adjusted gross income, nontaxable interest, and half of your Social Security benefits falls between $25,000 to $34,000 for single returns and $32,000 to $44,000 for joint returns, income tax is imposed on up to 50% of the reimbursement. For anyone making $34,000 on a single return or $44,000 for a joint return, expect an income tax up to 85%.
5. Determine the Best Return for Your Spouse/Domestic Partner
You can claim your own benefits, or delay claiming and reap half of your partner’s payout. To be eligible, a marriage must have lasted for a minimum of 10 years, but the arrangement need not be current (and several conditions apply). This can be beneficial if one’s spouse was a higher earner, since the calculation for spousal benefits will be based on the spouse’s salary. Widows and widowers are also able to benefit from a spouse whose earnings were higher.
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