Use technology to optimize your Social Security benefits
Benefits are adjusted annually for inflation and are unaffected by the ups and downs of financial markets. Perhaps most importantly, benefits are guaranteed for life, making Social Security an important form of insurance against the risk of running out of money later in life. This may be particularly important for women, who tend to outlive men, but also earn less income, generating lower levels of retirement assets.
For many people, the best answer is to delay applying for as long as possible, until age 70.
The amount of your monthly Social Security benefits depends on when you file your claim. You can apply for the retirement benefit from age 62 or wait until age 70, but the amount depends on your full retirement age – when you are eligible to receive 100% of the benefit that you won. Currently, the full retirement age is 66 years and a few months for most people. If you apply after full retirement, you will receive late filing credits; claim earlier and there will be early claim discounts. A claim at age of majority is worth 33% more in monthly income than a claim at age 62, and a claim at age 70 is worth 76% more.
“Almost everyone takes it way too soon,” Dr. Kotlikoff said. “About 6% of us wait until 70, but that should be 85%.
But there is no single answer, especially for married couples, who should have a coordinated filing strategy. “It often makes sense for the spouse with a lower income history to file earlier because it increases the total lifetime benefits expected from the household,” said Mike Piper, a chartered accountant who developed Open social securitywidely regarded as the best free online complaints tool.
Early filing can also be a smart option for people retiring early due to job loss or poor health. And claims for Social Security benefits should be part of a broader analysis of expected retirement income from retirement accounts and other annuity-type income, such as a defined-benefit pension. The taxation of retirement income can also be an important factor in the success of your plan.
Begin your analysis with your social security statement. This crucial document from the Social Security Administration lists your annual earnings from the time you started contributing to Social Security and tells you how much you can expect to receive at different ages – very important figures for all “what if” claim scenarios that you might want Courses. It is important to establish a free account on the administration’s website, as statements are only sent to people 60 years of age or older.
The Social Security website also offers information section on benefit claims, and a very basic, free retirement estimator feature that can calculate benefits based on your income history. The tool focuses on individual benefits – not the spouse or survivor – and does not calculate lifetime cumulative benefits. It also does not allow side-by-side comparisons of claim options.