A lot of American seniors rely on their social security benefits every month. This payment helps to cover their basic needs. If you are a senior and receive this payment, then you will benefit from knowing how to maximize your benefits every month—to at least $740 in 2025.
How the age you start benefits impacts your payments
One of the significant determinants of your Social Security payments is the age at which you start taking your benefits. Here is a breakdown:
- Starting at age 62: This is the earliest point at which you can collect your social security benefits, but your payment will be reduced for life. The reduction is exercised for every month that you collect your payment before reaching your Full Retirement Age (FRA).
- Wait until FRA: This is 66 to 67, depending on the year you were born. If you wait this long, you will receive 100% of the calculated benefit.
- Delay until age 70: Waiting to collect your benefits when you are 70 increases your payouts by 8% for each year you go past your FRA.
For example, you may be eligible to receive $1,298 per month at age 62 but you can inflate your benefits to $2,038 per month if you wait until age 70 to before receiving your payments. That’s an extra $740 to enjoy every month.
Read more: Social Security COLA calculation flaw will cost retirees $120 in 2025 – Will it ever be fixed?
Why delaying benefits might be worth it
Here are some reasons why delaying your benefits might be best for you:
- Higher lifetime earnings: Most retirees can increase their total lifetime income valuations through delaying their benefits, according to a National Bureau of Economic Research study.
- Inflation protection: Your social security benefits will always be adjusted based on the Cost of Living Adjustments (COLA) to make sure that your purchasing power is maintained even in the face of inflation.
- Financial flexibility: When you delay your benefits, you can use other sources of income to pay for your current expenses.
What to consider before delaying your benefits
While delaying benefits can be a smart move for many, it is not the right choice for everyone. Here are some factors to weigh:
- Health: If you have a shorter life expectancy due to health concerns, starting benefits earlier might make more sense.
- Savings: If you do not have enough savings to cover your expenses while waiting, you may need to start benefits earlier.
- Retirement goals: If you want to travel or enjoy other activities early in retirement, you might prefer to access your benefits sooner.
Tips for boosting your benefits
There are other options besides postponing benefits for increasing social security payments:
- Work longer: Your social security benefits are calculated on your highest 35 years of earnings. If those years include some low-earning years, working longer will extend the working years for you and replace low-income years with higher-income years.
- Maximizing your earnings: If you are still in active employment, the goal here is to increase your income. The more you earn, the more social security benefits you receive.
- Claim spousal benefits: If you are married, divorced, or widowed, it is possible that you may claim spousal or survivor benefits. This can increase your monthly income.
How to plan for your Social Security benefits
Planning ahead is key to making the most of your Social Security payments. Here are some steps to take:
- Use the Social Security Administration’s tools: The SSA’s online calculators can help you estimate your future benefits based on different scenarios.
- Consult a financial advisor: A professional can help you create a personalized retirement plan that considers your Social Security strategy.
- Stay informed: Keep an eye on changes to Social Security policies and benefits to ensure you are making the best decisions.
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