Here’s How to Get an Extra 24% Out of Social Security.

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President Eisenhower does an excellent job of demonstrating that, contrary to popular belief, Social Security is not a handout. It’s a program that working people contribute to throughout their careers in exchange for receiving necessary support later in life.

Social Security, which provides about 40% of our pre-retirement income on average, is also unlikely to fully support any of us. It’s worthwhile to attempt to maximize your benefits, and there are several ways to do so; here’s how you can get an additional 24 percent (or more!) from the program.

 

Social Security fundamentals

There are numerous methods for increasing your Social Security benefits, but we’ll focus on one of the most effective here. To begin, each of us has a full retirement age at which we can begin collecting the full benefits to which we are entitled based on our earning history. For the majority of us, full retirement age is somewhere between 66 and 67.

However, we can begin collecting benefits as early as age 62 or as late as age 70 — and the age at which we begin has a significant impact on the size of our checks.

 

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How to earn an additional 24% — or more

If you delay collecting benefits for one year beyond your full retirement age, up to age 70, your checks will grow by approximately 8%. Thus, delaying benefits from age 67 to 70 will increase them by about 24% – enough to turn a $2,000 check into a $2,480 check and increase annual benefits from $24,000 to nearly $30,000. Meanwhile, beginning to collect your checks early will result in a reduction in their size.

 

Delaying may appear to be a no-brainer, but consider the big picture:

Beginning collection later results in fewer checks overall. Those who begin early will amass a greater number of checks.

When you begin may not matter much for those who live average-length lives — except to your spouse, as the two of you may be able to maximize benefits through a coordinated Social Security strategy.

Many people simply cannot wait until they reach the age of 70 because they require that income immediately due to a job loss, a health setback, the need to care for a loved one, and/or insufficient savings. Those in poor health may benefit from beginning earlier as well.

Delaying retirement entirely, if possible, can benefit you in a variety of ways beyond increasing your Social Security benefit. For instance, you’ll have a few more years to save and invest for retirement, and your nest egg will have more time to grow. It will also have to support you for a shorter period of time.

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One strategy for delaying Social Security is to increase your withdrawals from other retirement accounts, such as IRAs and/or 401(k)s, until you begin receiving Social Security benefits.

Every individual’s circumstances and decision-making process will be somewhat unique. Take some time to educate yourself about Social Security so that you can make informed decisions and maximize your benefits.

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