A key component of financial planning is estimating your monthly Social Security benefit in retirement, which is largely based on your retirement plan and career decisions.
The government program can provide a substantial income, with the maximum benefit set to increase from $4,555 per month in 2023 to $4,873 in 2024.
Retirement Benefit: Three Key Steps
To achieve this maximum benefit, consider the following three steps:
Step 1: At least 35 Years of Work
When calculating your Social Security retirement benefit, the Social Security Administration takes into account the average of your 35 highest-earning years, adjusted for inflation.
Working fewer than 35 years may result in zeros filling in for the missing years, lowering your average. Most Americans will likely work for 35 years, but working into your 60s can increase your benefit further.
Earnings in your 60s are often higher, and the administration stops adjusting earnings for inflation after age 60.
Step 2: The Annual Maximum Taxable Amount
To maximize your Social Security retirement benefit, aim to pay the maximum Social Security tax for at least 35 years. Social Security taxes apply to wages up to a specific value each year, adjusted for inflation.
In 2023, this cap is set at $160,200, and it will rise to $168,600 in 2024. Earning the maximum taxable amount consistently is crucial for optimizing your benefit.
Step 3: Refuse to Claim Social Security at Age 70
While eligibility for Social Security benefits begins at age 62, waiting until age 70 can significantly increase your benefit through delayed retirement credits. For each year you delay beyond your full retirement age, you’ll receive an 8% increase in your benefit.
However, note that the full retirement age is increasing for those born in 1960 or later, reaching 67. Delaying past age 70 doesn’t result in additional credits, so it’s typically not beneficial.
Read more: Florida SNAP Benefits: Will You Receive November Payments On The Weekend?
Navigating Social Security Uncertainties
While uncertainties surround the future of the Social Security Trust Fund, focusing on factors within your control is essential. A pressing concern is the fund’s potential exhaustion by 2034, leading to a 23% benefit cut if no solution is found.
While advocating for policy changes is important, concentrating on maximizing your benefit through a high-paying career and strategic timing for Social Security can enhance your financial security in retirement.
Your Social Security benefit is a critical component of your retirement income, and strategic planning can significantly impact its amount. By working for at least 35 years, earning the maximum taxable amount, and delaying your claim until age 70, you can take steps to maximize your Social Security retirement benefit, providing financial stability during your golden years.
Read more: Inflation And SNAP Benefit Reductions Drive Hunger Relief Demand
