You are likely focused on saving and planning for retirement, understanding that retirement planning and estate planning are closely intertwined. While it is no longer feasible to rely solely on Social Security retirement benefits to fund your retirement, there are strategies you can use to maximize your Social Security retirement benefits. To help get you started, the Los Angeles attorneys at Schomer Estate & Wealth Advisors offer some tips to help you get the most out of your Social Security retirement benefits.
Grasping the Basics of Social Security Retirement Benefits
Social Security, established in 1935, was initially designed to provide financial support for retirees. At that time, life expectancy was shorter, and employer-sponsored pensions were common, so Social Security benefits served as a supplement to other retirement funds. Nowadays, with pensions being rare and retirees living longer, Social Security benefits play a more crucial role in retirement planning.
Your Social Security retirement benefits are determined by your work history (or that of your spouse). Throughout your career, you accumulate credits based on your earnings. The threshold for earning one credit increases over time to match inflation. For instance, in 2024, you earn one credit for every $1,730 you make, up to a maximum of four credits per year. To qualify for Social Security retirement benefits, individuals born after 1929 need 40 credits, which typically means working for at least ten years. The amount of your monthly benefits is influenced by several factors, many of which you can manage to enhance your benefits.
Tips to Help You Get the Most Out of Your Social Security Retirement Benefits
Even though you will likely need additional income to maintain your lifestyle during retirement, maximizing your Social Security retirement benefits is always a prudent move. Consider the following steps to boost your benefits:
- Work for at Least 35 Years: Social Security benefits are calculated based on your highest-earning years. Working more than 35 years allows higher-earning years to replace lower-earning ones, thus increasing your monthly benefit.
- Understand Your Full Retirement Age: While you can start claiming benefits at 62, doing so reduces your monthly payments. Your “full retirement age” depends on your birth year. For those born after 1960, it is 67. Knowing this age can help you plan the best time to start claiming benefits.
- Delay Benefits Until Age 70: If possible, postpone claiming your benefits until age 70, even if your full retirement age is 67. For each year you delay, your monthly benefit increases by approximately eight percent, resulting in a higher benefit for the rest of your life. If you claimed benefits early but regret it, you can withdraw your application within the first year and repay the received benefits. This option is available only once but can significantly increase your lifetime benefits.
- Evaluate Spousal Benefits: In some cases, a spousal benefit may be higher than your own benefit. Spousal benefits can be up to 50 percent of the higher earner’s benefit, which can be advantageous if one spouse had a significantly higher income. The higher-earning spouse must first claim benefits for the other to receive spousal benefits. If your spouse has passed away, you may be eligible for a higher surviving spouse benefit. Divorced individuals married for at least ten years may also qualify for benefits based on an ex-spouse’s earnings, with the same 50 percent rule applying.
- Benefits for Dependent Children: If you have dependent children under 19, they might qualify for additional benefits, up to 50 percent of a parent’s retirement benefits.
- Minimize Social Security Taxes: Social Security benefits may be subject to federal income taxes. Lowering your combined income before retirement can reduce these taxes. Utilizing a Roth IRA or making charitable contributions from your IRA can also help decrease your tax liability.
- Check Your Earnings Record: Set up a MySocialSecurity account to review your annual statements and ensure their accuracy. Mistakes in your earnings record can impact your benefit amount, so it is essential to verify the information regularly.
Incorporating these strategies can help you maximize your Social Security retirement benefits, ensuring a more secure and comfortable retirement. By taking proactive steps now, you can enhance the benefits you receive and better prepare for your future.
Do You Have Additional Questions about Your Social Security Retirement Benefits?
For more information, please join us for an upcoming FREE seminar. If have additional questions about retirement planning in your estate plan, contact the experienced Los Angeles estate plan attorneys at Schomer Estate & Wealth Advisors by calling (310) 337-7696 to schedule an appointment.
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