In recent years, financial advertisements and specialized articles refer to a supposed “$16,728 bonus” from Social Security, which has led thousands of retirees and future retirees to pursue this goal because, come on, it’s a pretty juicy sum, right?
Many end up dominated by frustration when seeking to achieve this goal that is often seen in the news headlines. This generates curiosity among those who depend on Social Security to retire. But what exactly does this number represent and where does this rumor come from?
The Roots of the $16,728 Social Security Bonus
The origin of the $16,728 “bonus” actually comes from other types of strategies aimed at maximizing Social Security benefits. To start, let’s demystify it: no, it is not an actual one-time payment or a special benefit provided by the Social Security Administration (SSA).
In a different sense, this so-called “bonus” refers to the potential increase in lifetime Social Security benefits that people can achieve by using certain techniques to maximize the payments. The first of these strategies is to delay claiming your payments as long as possible. It is an effective strategy when it is in your hands to do so. By delaying claiming, your benefits increase a certain percentage each year until you reach age 70, after which there are no more increases to wait and the money you contribute in Social Security taxes stops accumulating and becoming payments to you.
Joint spousal income can also be another interesting strategy. If you’re married, coordinating when and how both spouses claim their benefits can maximize total family income. Often a recommended strategy is for the higher-earning spouse to delay their claim to allow those benefits to grow.
Review and Correction of Income History before Social Security
Before claiming your payments, take the time to review and analyze your payment history, so that you are sure that all, absolutely all of the payments you have made from payroll taxes, are recorded, because the slightest missing hole in your retirement savings can push down your payments.
The Social Security Administration (SSA) calculates your benefits based on your 35 years of highest earnings, so reviewing and correcting any errors before applying for your benefits can ensure you receive the monthly amount you are legally entitled to.
Working Additionally Can Increase Your Retirement Benefits
Before you retire, if you have worked less than 35 years or have had years of low income, considering additional jobs to increase your income can increase the average on which your benefits are calculated. As long as your health and physical condition (and your desire to do so) allow it, you have the option of continuing to work, even if it is part-time, or full-time if applicable.