If you have spent your life working hard at a job, one of the most important benefits you expect to receive upon retiring is Social Security. An essential part of most people’s retirement plans, Social Security benefits are crucial to ensuring one can continue to live at or above their current standard of living. But along the way to retirement, many people fail to do what is needed to maximize the amount of benefits they will receive. If you want to make sure you get your Social Security benefits at the highest possible levels for your financial situation, here are some key tips you should keep in mind.
Work At Least 35 Years
If you want to receive the maximum amount of Social Security when you retire, plan on working at least 35 years prior to doing so. This is crucial, since your benefits are calculated based on the top 35 years of earnings at your job. Because of this, if you took time off along the way to raise children or care for a sick family member, you’ll have a few $0 on your benefit statement. To offset this, you may need to work a few extra years to make sure you have 35 years of earnings for calculation.
Pay Raises are Important
While you are in the prime of your working career, always try to get as many pay raises as possible. Whether this happens at one employer or you find yourself changing jobs for better and higher-paying opportunities, this can pay off tremendously upon retirement. By doing so, your Social Security benefits will be significantly higher upon retirement, which will make you glad you had that talk with your boss that resulted in a raise.
Work Until Your Full Retirement Age
If possible, try to work until your full retirement age in order to collect the maximum amount of Social Security benefits. For most people this is age 70, which is when delayed Social Security retirement credits stop accruing. Therefore, once you reach 70, you should always go ahead and file for your benefits. While you may think working an extra year or two won’t make much difference, you are wrong. For example, if you are allowed to collect $1,500 per month in benefits by retiring at age 67, waiting until age 70 will increase that amount to $1,860. As a result, you will have an extra $4,320 per year after retiring, which can come in very handy in many ways.
Taxing Benefits
While many people think Social Security benefits are free and clear of being taxed, that is not always the case. In fact, if you have a high income upon retiring, chances are you will find yourself paying federal taxes on at least a portion of your benefits. Along with this, there are 13 states that also require recipients to pay state taxes on their Social Security benefits, such as West Virginia, Rhode Island, Nebraska, Minnesota, Colorado, and several others. Because of this, if you are planning a move upon retirement, you may want to weigh the taxes you may have to pay on your benefits versus the cost-of-living expenses you will incur in your new surroundings.
Get a Second Job
If you find you are struggling to reach that 35-year threshold that will help you get the maximum amount of Social Security benefits upon retiring, consider getting a second job along the way. Even if it is part-time, having a so-called “side hustle” in today’s economy can pay off in many positive ways before you retire. With the current job market being very strong, chances are you can consider your interests and skills and find something you can not only enjoy, but also know will help your retirement income in later years.
By keeping all these tips in mind, you will be able to get your Social Security benefits and enjoy a wonderful retirement.
