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You might not realize it, but your Social Security check isn’t set in stone once you claim benefits.
On top of the annual COLA, which increases monthly benefits to keep up with inflation, there are several factors that could result in a boost to your income. Examples include switching to spousal or survivor benefits, or no longer falling subject to the retirement earnings test.
Still, the age you decide to initially claim benefits will have a huge impact on your finances in retirement. Claiming early usually means a smaller monthly benefit compared to waiting until you’re older. The difference between claiming as soon as possible at age 62 versus waiting until age 70 can be as much as a 77% increase in benefits.
While the ship might have sailed to get that 77% boost for waiting, there’s still a strategy where you can take back control of your monthly benefit by using a little-known rule. Some retirees could increase their Social Security check by as much as 26.7%.
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The three factors impacting your Social Security benefit
In order to understand the strategy for boosting your benefit up to 26.7%, it’s important to understand the basics of how the government calculates your monthly check. There are only three factors that determine the size of your first Social Security check:
- Your earnings throughout your career
- When you were born
- The age you claim benefits
When you apply for benefits, the Social Security Administration (SSA) will take a look at your earnings history and adjust each year’s earnings for changes in wage inflation. It then takes the 35 highest-earning years and finds the average. That number gets divided by 12 to determine your average indexed monthly earnings (AIME).
The SSA takes your AIME and plugs it into the Social Security benefits formula, which determines your primary insurance amount (PIA). The PIA is what you qualify for in the month you reach full retirement age.
Full retirement age will depend on when you were born. Those born between 1943 and 1954 reached full retirement age at 66. But the full retirement age has increased by two months for each year one is born after 1954 until reaching age 67 for anyone born in 1960 or later.
The last factor determining the size of your initial benefits check is when you claim. If you claim before your full retirement age, you’ll receive a reduction from your PIA. If you wait to claim beyond full retirement age, you’ll accrue delayed retirement credits.
The table below shows the impact claiming age has on your monthly benefit relative to your PIA:
| Year Born |
Age 62 |
Age 63 |
Age 64 |
Age 65 |
Age 66 |
Age 67 |
Age 68 |
Age 69 |
Age 70 or later |
|---|---|---|---|---|---|---|---|---|---|
| 1943 to 1954 | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% | 132% |
| 1955 | 74.2% | 79.2% | 85.6% | 92.2% | 98.9% | 106.7% | 114.7% | 122.7% | 130.7% |
| 1956 | 73.3% | 78.3% | 84.4% | 91.1% | 97.8% | 105.3% | 113.3% | 121.3% | 129.3% |
| 1957 | 72.5% | 77.5% | 83.3% | 90% | 96.7% | 104% | 112% | 120% | 128% |
| 1958 | 71.7% | 76.7% | 82.2% | 88.9% | 95.6% | 102.7% | 110.7% | 118.7% | 126.7% |
| 1959 | 70.8% | 75.8% | 81.1% | 87.8% | 94.4% | 101.3% | 109.3% | 117.3% | 125.3% |
| 1960 or later | 70% | 75% | 80% | 86.7% | 93.3% | 100% | 108% | 116% | 124% |
Data source: Social Security. Calculations by Author.
If you look in the rightmost column, you’ll see retirees can receive 24% to 32% on top of their PIA by waiting until age 70 to claim benefits. But even if you’ve already made your claim, you can still earn valuable delayed retirement credits.
The little-known strategy to increase your monthly benefit
If you claimed benefits early but wish you had waited a little longer, there’s still hope for you — ask the SSA to suspend your benefits.
When you suspend Social Security benefits, you stop receiving your monthly check. In exchange, the SSA will start adding delayed retirement credits to your account. The credits are calculated as a percentage of your previous benefit instead of your PIA.
You can suspend benefits starting at your full retirement age, up until a month before you reach age 70. You can resume benefits anytime. The SSA will automatically resume your benefits once you reach age 70 if you haven’t requested them already.
If someone born in 1958, with a full retirement age of 66 and eight months, decides to suspend their benefits the month they reach their full retirement age, they can boost their current benefit by up to 26.7%. If you’re past full retirement age already, you can still increase your benefit as long as you’re not yet 70. And those born after 1958 can boost their benefit by 25.3% (1959 birthdays) or 24% (1960 or later).
Suspending benefits won’t be for everyone, though. Anyone collecting benefits on your record (spouses or children) will no longer receive those benefits either. Spousal benefits will revert to personal benefits.
It’s also worth pointing out that Medicare enrollees will be responsible for paying their Part B premiums directly. The SSA typically deducts that amount from your monthly check.
If your financial position improves in your 60s, and you’re comfortable going a few years without Social Security, it might make sense to suspend your benefits. It could mean much more Social Security income over your lifetime.
The $22,924 Social Security bonus most retirees completely overlook
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