How to get an extra $1,830 per Social Security check | Smart Switch: Personal Finance

(Keith Noonan)

The amount you receive in Social Security payments could have a significant impact on your overall quality of life and your ability to enjoy your retirement years. There are multiple factors that affect your benefits, and it can be very profitable to have a good understanding of what affects your distribution amount and what you can do to shape that total. Knowing what these factors are now can help you set your expectations for retirement.

For example, with one relatively simple step, a select group of the US population can add an additional $1,830 to their monthly Social Security payment, provided they meet the income requirements. Following the step could be the difference between a monthly payment of $2,364 and a payment of $4,194 per month. Here’s how to make it happen.

Image source: Getty Images.

Meet the income requirement

The first component to earning an additional $1,830 in monthly Social Security income is being in the highest income bracket for the entire calculation period. The Social Security Administration (SSA) calculates your benefit based on your average indexed monthly earnings (AIME) over your main 35 years of earnings adjusted for inflation. For 2022, reaching the maximum level of taxable income needed to maximize your monthly benefit means having inflation-adjusted annual earnings of at least $147,000 during the calculation period.

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Of course, reach the highest income level to calculate Social Security it is something that relatively few people will achieve. The Social Security Administration estimates that only 6% of eligible Americans met the maximum taxable income threshold in the bracket needed to qualify for the maximum potential benefit. The next step involves patience.

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Delay in receiving Social Security benefits

If you reached the maximum amount of taxable income during the calculation period, the second component to earning the maximum distribution involves delaying the start of your benefits beyond your initial point of eligibility, beyond your designated Full Retirement Age (FRA). ) (varies) , and waiting until age 70. In 2022, the current the minimum retirement age for Social Security is 62and the maximum monthly benefit you can receive if you retire and begin receiving benefits at that age is $2,364.

This chart describes when you’ll reach FRA based on your year of birth and how much your benefit would be reduced if you started receiving Social Security payments at age 62 instead of FRA.

For people who come to FRA in 2022 and decide to receive benefits this year, the maximum Social Security distribution is $3,345 per month. But it is possible to increase that amount by postponing receiving benefits. Your monthly benefit will increase slightly each month that you delay taking Social Security beyond FRA.

This chart depicts what the increases look like as a percentage on a quarterly basis.

Data source: Social Security Administration.

Delaying your initial Social Security claim until age 70 means you’ll get an additional 8% benefit increase for each year you defer claiming after full retirement age. If your FRA is 66, delaying your Social Security benefit until age 70 could result in a 32% increase in your benefit, no matter what your base salary was. For that select group with a 66-year-old FRA who reached the maximum amount of taxable earnings during the AIME calculation period, postponing benefits to age 70 will increase their monthly benefit by $1,830 and allow them to reach the maximum benefit of $4,194 per month. .

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Do you think this does not apply to you?

For the 94% of us who haven’t met the maximum Social Security income requirements, the rules about delaying benefits for larger payments still apply, and you can increase your payment too. So don’t be discouraged if this scenario doesn’t exactly describe your situation and you’re not one of those in line for a raise of $1,830 a month. You can maximize whatever your benefits are in the same way by waiting until age 70 to apply. investigate what your benefits will be and see how much better you could do by delaying the start of benefits beyond FRA.

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