Have you heard about the alleged Social Security $16,728 yearly bonus? Contrary to the term “bonus,” retirees can’t expect a lump sum, but there are strategic approaches to boost your benefits. The Social Security Administration (SSA) relies on a specific formula tied to your lifetime earnings to determine your benefit amount. Let’s explore how you can create your own bonus by optimizing your eligibility.
There’s no magic tricks you can do to get some mysterious bonuses. The foundation of your Social Security benefits lies in the 35 years you earn the most. Low or no income years can diminish your qualifying amount. The SSA incorporates each year of work, replacing zero or low earnings, which can positively impact your benefit calculation.
The Truth Behind Social Security Payments
There is a cap on earnings used to calculate retirement benefits. As of 2023, this stands at $160,200, subject to annual inflation adjustments. By striving to maximize your annual income, you can enhance your overall benefit amount.
While only a mere 10% of workers wait until age 70 to collect Social Security benefits, the financial advantages are substantial. Claiming benefits at age 70 ensures that you receive the maximum benefit amount. Research indicates that claiming before 70 could result in a median household loss of $182,370 in lifetime discretionary spending for individuals aged 45 to 62.
Retirement benefits at 70 soar to an impressive 76% higher than benefits claimed at age 62, adjusting for inflation. The delayed gratification of waiting until age 70 can significantly enhance your financial stability during retirement.
3. Strategic Spousal Benefit Planning
For married couples, strategic planning is paramount when it comes to spousal benefits. Unlike personal benefits, delaying spousal benefits past the full retirement age (usually age 66 or 67) doesn’t lead to an increase. The spousal benefit amount can be based on their own earnings or up to half of the higher earner’s benefit, whichever is higher, according to the SSA.
Being strategic about when to claim spousal benefits can make a substantial difference in the overall financial picture for couples. Understanding the rules and optimizing the timing of spousal benefit claims can lead to a more robust and secure retirement.
As you can see, there’s really no “bonus” that retirees can collect, but some discipline along the years could get you a juicy check for a nice retirement during our golden years.