Six Ways to Make the Most of Social Security Benefits

Social Security

Six Ways to Make the Most of Social Security Benefits

Posted by COTO Insurance & Financial Services
5 years ago | January 6, 2019

After decades of paying Social Security taxes, we all expect our Social Security benefits to be waiting for us when we need them. They will be, but the choices you make now and in upcoming years can affect the final monthly amount of your checks. Since Social Security is likely to be an important part of your overall retirement plan, take these six steps to make the most of your future benefits.

Before you retire, verify your earnings record. Your checks will be calculated based upon a formula that includes 35 highest-earning years. Since mistakes do happen, review your record to be sure Social Security has accurately recorded this information. Report any discrepancies right away, so that they can be fixed before you retire.

Work at least 35 years. When zeros are averages into that formula, this reduces your final check amount. Work at least 35 years before retiring, if you’re able.

Learn your full retirement age. “Full retirement age” is the age at which you can claim your full benefit amount. This age is based upon your date of birth, and ranges between 65 and 67. If you retire earlier than that age, your benefits will be reduced by up to 25 percent.

File your claim later. On the other hand, waiting beyond your full retirement age can net you benefits checks that are about 8 percent larger for each year that you wait. Some people, who are able-bodied and enjoy their jobs, continue to work a bit longer for this reason. Others go ahead and retire, but structure their income strategies so that they can delay their Social Security claims.

Watch out for taxes. Social Security benefits can be taxed, depending upon your overall income amount. Working with a skilled retirement advisor can help you understand these tax brackets and the formula used to calculate taxes, and you can often make changes to your retirement income plan to avoid excessive taxation.

Consider relocation. In addition to taxes at the federal level, some states tax Social Security benefits, too. Some retirees establish their residence in a tax-friendly state to avoid this situation.

Social Security planning is a complicated topic, and many different strategies exist to address the possible complications. To receive guidance geared specifically toward your needs, come see us before you retire and make the final decisions regarding your benefits.

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