Collecting Social Security benefits can be a complicated procedure because there are several laws and conditions that affect how much retirees get, and proper information is not always easy to obtain.
But, the amount of money you can claim in monthly benefits can vary significantly depending on a variety of circumstances, such as when retirees file for Social Security, how long they work, and how much they earn over the course of their employment. Here’s how you earn an extra $1,983 every Social Security check, or $23,796 per year.
Choosing When To Claim Social Security Benefits
Retirees have considerable leeway in determining when they can begin receiving Social Security benefits. Individuals can begin receiving benefits as early as age 62 or as late as age 70, but the age at which they begin receiving benefits has a significant impact on the quantity of their monthly Social Security checks.
When a retiree claims benefits before their full retirement age (FRA), which is 67 for those born in 1960 or later, he or she is subject to a penalty of up to 30 percent of the main insurance amount (PIA), the number of benefits to which he or she is entitled. The Social Security Administration (SSA) reduces benefits by 5/9 of 1 percent for each month of early receipt. After thirty-six months, benefits are cut by 5/12 of 1 percent.
But, if you wait to claim, your benefits will grow by 2/3 of 1% per month, which equates to 8% per year or 24% in total over three years. As you can see, deciding when to file for benefits can have a significant impact on your final income.
Keep in mind, however, that the amount of benefits you receive also relies on your length of employment and income.
The SSA uses a retiree’s highest 35 years of earnings to determine their PIA. To obtain the maximum benefit, retirees must also earn and pay taxes on the maximum amount of wages that the Social Security Administration (SSA) can tax each year, known as the benefit base.
Typically, the benefit base is similar to a salary earned solely by high-income employees, and it frequently increases to keep pace with inflation, making it difficult to stay up each year. In 2022, for example, the benefit base was $147,000. The benefit base increased to $160,200 this year as a result of the previous year’s extraordinarily high inflation.
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How To Receive Extra $1,983?
Even though it is difficult to qualify for the full Social Security benefit due to the required wages, the maximum monthly benefit is $2,572 if you qualify and begin receiving benefits as early as feasible at age 62.
If you wait until age 70, however, the maximum monthly Social Security payment is $4,555, a difference of $1,983. Delaying Social Security benefits can increase seniors’ monthly payments, but it shouldn’t be the deciding factor when deciding when to begin receiving benefits.
The decision should be based on a person’s health and financial situation. If you can afford to wait, it makes perfect sense, but there are instances when you cannot.
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