Social Security retirement benefits can be an important part of any individual’s retirement plan. In order to make the most out of them, it’s important to do some research and planning. This will allow you to understand how much you can expect to get from Social Security every month, maximize your benefits as much as possible, and plan for other sources of income for your retirement.
This guide offers some key steps individuals are recommended to take as they approach retirement in order to best plan for maximizing their Social Security benefits.
1. Determine Your Potential Eligibility for Benefits
There are several different types of Social Security benefits including retirement, disability, survivors, dependents, and Supplemental Security Income. You may be eligible for one, more than one, or none. It’s important to understand Social Security eligibility requirements in order to know which type(s) of benefits you can expect to receive.Â
This resource from the Social Security Administration can help you check your eligibility for different types of benefits. The table below offers a general summary of the eligibility requirements for Social Security benefits.
| Benefit Type |
Eligibility Requirements |
| Retirement |
- Accumulated a minimum of 40 work credits (which is generally equivalent to at least 10 years of working) during which you earned a certain amount and paid Social Security taxes.Â
- Be age 62 or older
|
| Disability |
- Be unable to work because of a physical or mental condition that has lasted or is expected to last for at least 12 consecutive months or result in death
- You must have worked and paid Social Security taxes for a certain number of years so that you accumulated a certain number of work credits within a certain period before you became disabled. The specific number of credits you must have accumulated, and how recently, will differ based on your age at the time of your disability
|
| Spousal benefits |
- Be the current, or, under certain conditions, a former spouse of somebody who receives or is eligible to receive Social Security retirement or disability benefits
- In some cases, not be entitled to or eligible for a benefit on your own work equal to or higher than half the full amount the worker is eligible for
- Be 62 or older OR care for the worker’s child who is under 16 or has a disability
|
| Survivor benefits |
- Be the surviving spouse, or, under certain conditions, the former spouse of a deceased person who qualified for Social Security benefits
- Be 60 or older OR
- Be 50 or older with a qualifying disability ORÂ
- Be any age and care for the worker's child who is under 16 or has a qualifying disability
- Under certain conditions, the children, stepchildren, adopted children, or parents of a deceased may also be entitled to survivor benefits.
|
| Supplemental Security Income |
- Be 65 or older OR
- Be blind or have another qualifying disabilityÂ
- Have limited income and resources
- First apply for Social Security benefits and any other government benefits you may be eligible for
|
2. Review your earnings record
Your Social Security benefits amount is decided at least partially on the basis of your earnings record. For this reason, it’s important that you confirm that the Social Security Administration has accurate information about your earnings. You can see this information on your Social Security Statement. If it is incorrect, it’s important to contact the Social Security Administration in order to correct them so you will receive the benefits owed to you.
3. Consider other sources of income
For most people, Social Security retirement benefits alone will not be enough money to support them. Understanding what other potential sources of income you will have access to in your retirement will help you get a sense of whether or not it is important for you to make an effort to maximize your Social Security benefits and to what extent.
Potential sources of income you may plan for during retirement may include:
- Pension income, which may come from various sources, including employer-sponsored defined benefit or defined contribution retirement plansÂ
- Accessing your home equity, for example, by obtaining a reverse mortgage
- Invest in bonds or stocks that pay dividendsÂ
- Establishing and funding brokerage or savings account such as an IRA
4. Understand what factors affect your social security benefit amount
In addition to your earnings record, several other factors affect how much your Social Security monthly benefit will be. These include:
- Medicare - If you sign up for Medicare Part B, a portion or all of the costs (depending on your income) will be deducted from your monthly Social Security benefit payments
- Withholding taxes - If your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000 per year (or $32,000 per year filing jointly), you may have to pay federal income taxes on a portion of your Social Security benefits
- Continuing to work - If you earn more than your earnings limit and it is before your Full Retirement Age, your benefit payment will be temporarily reducedÂ
- Your retirement age - While you begin receiving retirement benefits as early as age 62, However, if your do so, your monthly benefits will be reduced in be a certain percentage for each year you retired before your full retirement age (FRA), which is between 66 and 67 depending on your birth date., your monthly benefits will be reduced In contrast, if you take benefits later than Full Retirement Age (up to age 70), you will earn delayed retirement credits and your monthly benefits will increase.
5. Choose when to take benefits
Based on the information above, your final step is to decide when to take Social Security retirement benefits. Consider the following points:
- What are my financial needs? Can I afford to wait longer to begin taking benefits? Do I have other income that will support me?
- What is my life expectancy? How long do I anticipate my retirement will be?Â
- Am I eligible for benefits on the basis of my spouse’s work record? (If you plan to take dependent benefits on your spouse’s work record, they will max out at FRA, so there is no reason to wait until later.)
- Can I or do I want to continue to work after FRA?
6. Applying for Benefits
Your final step of Social Security planning is to apply for benefits. You can do this online at the Social Security Administration’s website or in person at a Social Security office.
Note that you can plan your application to avoid a gap in income. In order to receive your first benefits payment on a specific month, you should pick the month prior on your application and apply up to four months before the month you pick.
For help with planning and applying for Social Security, it’s always a great idea to reach out to a Social Security expert.
