Social Security will replace about 40% of the typical workers pre-retirement income. For those earning $150,000+ that percentage drops to 27% on avg.
It’s very important to look at ways to maximize your future benefits. Here are some simple things to consider.
- Do NOT assume you know everything about all of your benefits: When it comes to this topic most folks usually do what I call the “what did you do test?”. What that means is they ask someone who is collecting “hey what did you do?”. This is obviously the WRONG thing to do because you have no idea what the other individual’s goals and objectives are.
- Do NOT wait past 70. As many of you already know, after you reach your full retirement age (FRA) your benefits will continue to grow by 8% a year until you reach age 70. I have never met anyone who has waited to over age 70 to collect their benefits, but after 70 there is no additional benefit to continue waiting.
- Patience and timing with benefits is key. One of the key’s to maximizing your social security benefits is that you MUST have a claiming strategy. You MUST know how to marry this source of income together with your other sources. A carefully planned claiming strategy will allow you to not only be more tax efficient in the future, but also have more income.
- Working longer may result in higher benefits. As long as you are working you will continue to contribute into your social security. Actually it doesn’t matter what age you are. The longer you work the bigger your benefit will get over time.
- Remarrying can cost you …. BIGLY! A divorced spouse is entitled a portion of the ex-spouses benefit if they were married for 10 years or longer and are 62 years or older. However, if you got remarried before age 62 you will lose out on that benefit. So if your ex-spouse made a lot of money and you got divorced say at age 55 and then at age 58 you married someone that didn’t do as well as your ex-spouse, you just forfeited the higher benefit and will now fall under the benefit of the lower earning spouse.
Here are just a few important things to know and like I have said before, plan, plan, plan. You are going to be retired for a long time and we want to make sure we maximize every income avenue.