Maximizing Social Security Retirement Benefits: Experts Reveal Strategies to Get Bigger Monthly Checks
By Jace Dela Cruz
Dec 09, 2023 02:22 AM EST
Dec 09, 2023 02:22 AM EST
With the renewed focus on the Social Security retirement age due to recent Republican presidential debates, experts propose strategies to help people get bigger monthly checks.
According to CNBC, the Social Security board of trustees expects the program's combined funds to run out in 2034, when only 80% of benefits may be payable.
Lawmakers could opt to raise taxes, cut benefits, or combine both to prevent that. Another possible change involves increasing the retirement age, which was done in 1983 when Social Security faced the same solvency issues.
The full retirement age (FRA) went from 65 to 67 in 1983. The FRA for Social Security is when a person is entitled to 100% of their monthly Social Security retirement benefit. It ranges from 66 to 67.
However, some people could opt to receive their Social Security retirement benefits as early as age 62. The Social Security Administration determines an individual's FRA based on their birth year.
Waiting until full retirement age ensures 100% of earned benefits, with a potential 8% surge for each year past. Despite financial advantages, around 90% of retirees opt for earlier claims, prompting experts to underscore the long-term investment potential of delaying until age 70.
1. Delay Social Security and Rely on Other Funds
Financial experts, including those at the Schwartz Center for Economic Policy Analysis at The New School, recommend utilizing other income sources, such as retirement accounts, while waiting to claim Social Security benefits. Research cited by CNBC suggests that relying on personal savings until age 70 may increase Social Security benefits by $1,000 a month.
2. Ensure Accessibility to Bridge Annuities
Economist Jason Fichtner, who also serves as a Senior Fellow at the Alliance for Lifetime Income, suggests that waiting a few years longer for Social Security benefits can make a substantial difference. Annuities, which provide a guaranteed source of income, could be an option for covering income needs during the delay.
3. Create a Social Security Bridge Benefit
A recent task force report from the National Academy of Social Insurance proposed the creation of a bridge benefit starting at age 62 and lasting until full retirement age. Employees could apply for the bridge benefit based on a history of physically demanding jobs.
4. Improve Special Minimum Benefits
Experts at the Schwartz Center for Economic Policy Analysis suggest improving the value of the special minimum benefit provided by Social Security for workers with low earnings for many years. Strengthening this benefit could offset potential cuts resulting from an increase in the retirement age.
Regular Social Security benefits are connected to wages, while the special minimum benefit is linked to prices. Experts suggest improving the special minimum benefit by raising the benefit levels, re-indexing them, or changing eligibility rules.
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