When it comes to Social Security, many have heard claims of a mysterious $16,728 yearly “bonus.” The truth? This figure isn’t a special payout or bonus retirees can simply claim. Instead, it highlights the strategies you can use to maximize your benefits over a lifetime. The Social Security Administration (SSA) determines your benefit amount using a formula based on your highest 35 years of earnings. While there’s no bonus per se, you can still optimize your payments significantly.
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Here are actionable steps to help you maximize your Social Security benefits:
1. Boost Your Earnings During Your Career
Social Security calculates your benefits based on your 35 highest-earning years. If you have years with little or no income, those zeros pull down your average. Working longer and earning more can replace those low-earning years, thereby increasing your overall benefit amount.
Pro Tip: In 2023, earnings up to $160,200 are considered for Social Security calculations. This limit adjusts yearly for inflation, so stay informed and aim to maximize your reported earnings.
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2. Delay Claiming Benefits Until Age 70
Patience pays off when it comes to Social Security. While you can begin claiming benefits at age 62, waiting until age 70 can increase your monthly payments by 76%.
Key Insight: According to CNBC, claiming benefits before age 70 can cost households a median loss of $182,370 in lifetime discretionary spending. Only 10% of workers wait until 70, but the financial benefits can be substantial for those who do.
3. Strategize Spousal Benefits
Married couples have a unique advantage with spousal benefits, which can be up to half of the higher earner’s benefit. Unlike personal benefits, spousal benefits don’t increase after full retirement age (FRA), so it’s best to claim them at that time.
Know Your FRA: This age varies by birth year, typically 66 or 67. By planning strategically, you can maximize the combined benefits for you and your spouse.
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Debunking the Bonus Myth
The idea of a $16,728 yearly bonus may sound enticing, but it’s more about understanding how to maximize your Social Security benefits through strategic planning and informed decisions. While there’s no magical payout, implementing these tips can feel like earning your own “bonus” as you enjoy greater financial security in retirement.
Remember, planning early and reviewing your Social Security options can make a significant difference in your post-retirement income.
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