Social Security - 4 EASY ways to INCREASE your BENEFIT

this one's a no-brainer Social Security is a foundational piece of most people's retirement so it makes sense to take a little bit of time and just try to squeeze as much out of your social security benefit as possible I'm John gragg your certified financial planner with apsadvisor.com where we help our clients plan for a comfortable retirement before we begin it's important to know how Social Security is funded which is through a 12.4 percent payroll tax 6.2 of which is paid by you the other 6.2 is paid by your employer if you're fortunate enough to be self-employed you're also fortunate enough to pay the entire 12.4 percent now there is a cap on your max earnings and for 2023 that is a hundred and sixty thousand two hundred dollars if uh just to give you a little bit of perspective back in 1986 the cap was forty two thousand dollars strategy number one is delaying your benefit and you've probably heard this a thousand times but I'm gonna say it a thousand and one so you can start as early as 62 you get an eight percent bump every single year you delay up until the age of 70 where it maxes out now between those two years there also is What's called the full retirement age and that most likely is going to be 67. this is significant because if you have significant earned income then most likely your benefit is going to be reduced once you hit the age of 67 you can earn as much as you want and your benefit is not going to be reduced I made another video that discusses a good timing strategy on when to claim Social Security so I'll put that in the link below strategy number two is going to be maximize your earnings the first thing you need to do is just go to ssa.gov sign up and get your social security statement this is going to show you what your benefit is going to be and it also shows you all of your years of earnings which is kind of cool it lays them all out so go ahead and do that I've already done it there's really no excuse because it's really easy let's take a look at a statement right here so on page one of the social security statement it's going to show your payouts depending on the year you filed right how long you are delaying and on the second page we're going to be able to see the earnings history so this is where your benefit is actually calculated so although you only need 10 years of work to qualify they base your benefit off your highest 35 years of earning so if you only work 25 years then they're actually going to replace those 10 years with a zero so once you have your statement you can actually go on the Social Security website plug in your earnings see what may be working in additional year replacing one of those zeros would do to your overall earned income which is going to overall affect your benefit spousal and survivor benefits are the third strategy and they're not really as much of a strategy as they are just important to know because they kind of play into the overall decision making so from a spousal standpoint you're going to receive the higher of your benefit or 50 of the higher earning spouses benefit so let's just kind of boil that down right if the higher earning spouse has a three thousand dollar benefit and the lower earning spouse has a 1100 benefit then the lower earning spouse is actually going to receive a fifteen hundred dollar benefit now if you do three thousand and eighteen then the low earning spouse is going to receive that eighteen hundred dollar benefit because that benefit is higher and they're automatically going to do this now from a survivor's standpoint what's going to happen is you're going to receive a hundred percent it's the higher of your benefit or a hundred percent of the person who passed away their benefit at full retirement age which most likely is 67. so you'll receive 100 of that or yours whichever is greater strategy number four is called the split strategy and this really is just coordinating with your spouse so let's take a look at an example to see how this may play out Sharon and Ken are deciding when to start collecting their social security retirement benefits so Sharon was born in 1960 Ken was 1962 their fra is at 67. at their full retirement age Ken's is going to be 2100 per month and the primary Insurance amount is is the benefit so and Sharon's is going to be 9.75. so right away we can see that Sharon's spousal is going to be higher than what her actual benefit is so because they've saved for retirement in a 401k and Ira they decide that only one of them needs to apply for Social Security at their full retirement age so over the long run they'd earn more by delaying Ken's benefit since he's the higher earner so Sharon applies at 67 and receives 975 dollars per month Ken Waits until age 70 to apply and his benefits have grown to 2 715 per month right because he's getting that eight percent bump so when Ken applies Sharon switches to spousal benefits and she's entitled to half of Ken's remember this is at full retirement age so it's the Pia that 2100 number not the 2715. so she's entitled to 1050 and because they delayed Ken's benefit now the surviving spouse is also in line to collect much more now everyone's situation is different but you can see what happens when you coordinate with your spouse and you kind of play with the numbers to see what makes most sense with you that's really called the split strategy so there's there's nothing specific it's really just taking a look at both of your situations deciding who is the higher earner who's the lower earner who's the older one who is uh maybe has a longevity in their family maybe somebody's has an illness and expected to pass away so these are all things that can play into the split strategy when you're making a decision Social Security planning can be pretty overwhelming so there's no perfect answer you just want to make sure you have all the details and make an educated decision but don't let it stress you out too much because that tends to happen with a lot of people if you want help with retirement planning feel free to reach out we offer a complimentary consultations over the phone and we'd be happy to do so if you enjoyed the video hit that subscribe button so you can be alerted for new videos thanks for watching see you next time

Channel: John Gragg, CFP®

Views: 702

Keywords: Retirement, Social Security, Retirement ready, income, pension, financial planning, john gragg, cfp, certified financial planner, redondo beach, palos verdes, investment management, retirement planning, Early social security, delayed social security, maximize social security, social security planning, retirement plan, ssa, spousal benefit, survivor benefit

Id: 2GXtN4oKRFA

Length: 6min 12sec (372 seconds)

Published: Tue Aug 15 2023