It may not be too late to get more out of Social Security. Several factors determine how much you receive in Social Security benefits each month, and you may have more control over them than you think, one of the most important factors. What affects your benefit is when you apply for Social Security, since the sooner you apply, the smaller your benefit will be.
The difference between claiming as early as possible, at age 62, and waiting until your benefits reach the maximum retirement age at age 70 can be up to 77%, if you have already claimed benefits, you may even if you regret that decision, a larger benefit in the future can be a big help, especially as medical expenses increase in later life.
Fortunately, there is a strategy that can help you increase your Social Security monthly benefit, and some can increase it by up to 28%.
How the SSA Calculates Your Social Security Benefit
There are three factors that determine how much you receive in Social Security benefits each month:
- How much you earned during your working life.
- When is your date of birth.
- The age at which you apply for benefits.
The first thing the government does when you apply for Social Security retirement benefits is check your income history. The Social Security Administration (SSA) will do a study of your income each year, based on the increase in your income level over lifetime, then selects the 35 years with the highest adjusted earnings and averages them, that number is entered into the Social Security benefit formula to determine your primary insurance amount (PIA).
The PIA and Its Intervention in the Social Security Benefits Calculation
The primary insurance amount, or PIA, is the benefit you will receive if you request it in the month in which you reach your full retirement age (FRA), those born in 1954 or earlier reached their FRA at age 66, but increased by two months for each year after 1954 that someone was born until reaching a maximum of 67 years for those born in 1960 or later.
To understand exactly how the timing of your Social Security claim affects your benefits, see the table below, which shows the percentage of your PIA you receive based on your year of birth and claim age.
As you can see, if you delay your claim until age 70, you’ll receive a benefit check that will be 24% to 32% higher than your PIA, depending on when you were born, but even if you filed for retirement sooner, you may still have the opportunity to collect deferred retirement credits and increase your benefit check.
The Little-Known Social Security Rule That Can Increase Your Monthly Benefit
If you want to collect deferred retirement credits, but have already started collecting benefits, you can ask the Social Security Administration to suspend them, you can suspend benefits at any time once you reach the deferred retirement age, and the suspension will begin the month following the approval of your application.
The moment you suspend benefits, you will stop receiving your monthly Social Security checks. Instead, you will accumulate delayed retirement credits. These credits will add two-thirds of a percentage point to your benefit for each month you have them suspended. , and the Social Security Administration will automatically resume your benefits when you turn 70, if you haven’t already resumed them.