How to Maximize Your Social Security Benefits

Most of us anticipate that our retirement incomes will be derived from several sources, such as withdrawals from a retirement account, a pension or annuity, and of course, Social Security. Part of the retirement planning process involves maximizing each of those sources, so that you can build the most retirement income possible for your situation.

With regard to Social Security, you might be wondering how much you can possibly claim. Let’s take a look at the maximum benefit amounts for 2019:

• $2,861 for a beneficiary who files for benefits at full retirement age (currently 66)
• $2,209 for a beneficiary who files for benefits at age 62
• $3,770 for a beneficiary who waits until age 70 to receive benefits

Keep in mind that these maximum benefit amounts are for 2019 only. These figures can and do change, almost every year. Whenever Social Security issues a Cost of Living Adjustment (and they do in most years, but not all), the maximum payments increase just a bit.

Now for the real question: How does a person claim the maximum Social Security benefit?

Let’s review how Social Security payments are calculated. Social Security uses a complicated formula to determine these amounts, but it is essentially based upon two factors: Your highest-earning 35 years of employment, and the amounts you earned (and therefore the taxes you paid into the system) during those years.

If you didn’t work at least 35 years, some zeros will be averaged into your equation, bringing down your overall earnings. So, the first thing you want to do is work for at least 35 years. If you work longer, especially at the peak of your career when earnings are highest, you will do even better.

If you can, you should strive to earn up to the maximum taxable income each year, too. For 2019 that figure is set at $132,900. This is the maximum amount that Social Security taxes for the purpose of calculating benefits later. Earning more than that threshold won’t increase your benefits, but earning as close as possible to the maximum each year will be the key.

Of course, keep in mind that this maximum taxable amount has changed over the years. It’s only important that you earned as close to each year’s maximum as possible.

Obviously, not everyone will earn the maximum taxable amount each year, and some people won’t enjoy a 35-year career, either. But do keep these two important points in mind, when planning for your future retirement income. Maximizing both of these factors will help you to earn larger Social Security checks, and boost your overall retirement income.
For more information on planning for retirement, give us a call. We can help you investigate other ways to establish the income you will need, and set a date for retirement that suits you.