Most Americans are playing catch up when it comes to retirement savings.
Even if you make a sizable income, putting away money for retirement is challenging. There is always some necessity with which you must deal. So, making sure you receive the most retirement income possible from Social Security is essential.
Fortunately, there are some strategies you can use to get the most out of your Social Security benefits. While the Social Security Administration doesn’t hand out bonuses, some bonus-like increases can happen.
You must wait until full retirement age (FRA) before you receive your full benefits. Today, FRA is typically age 66 or 67, depending on your birth year.
But if you retired early and are hoping to make a little extra income, there might be a way to give yourself a bonus.
You can retire at 62 at a reduced benefit, but any additional income you receive beyond Social Security will be restricted until you reach FRA. During this period, you are restricted from earning more than an additional $1,630 per month. If you go above that amount, your Social Security benefits will be reduced.
The average Social Security check at FRA, without additional income, is $1,563 per month. If you retire early, that check will be reduced. The additional earned income restriction can be an extra hardship during this period.
Posey proposed the act to help senior citizens combat inflation. It would help Social Security recipients reduce their need to incur debt and give them bonus-like income.
Essentially, there are circumstances when you perform work before you retire, but receive pay for it after retiring. Most of the time, regardless of age, these payments will not affect your Social Security payments. Special payments might include vacation pay, sick pay, severance pay, back pay, bonuses, and sales commissions.
Salespeople and insurance agents may be affected by the special payments rule. These earners often receive commissions for sales they made before retirement. They are not penalized for these special payments.
Farmers may also receive deferred payments. Often farmers grow crops one year and sell them in another year. If a farmer sells these crops after retiring, the income earned is considered a special payment and Social Security payments are not penalized.
A self-employed individual can also take advantage of special payments. If you were self-employed, any net income received after the first year you retire is a special payment. But this income must have been earned for “services” of regular work and performed before you were eligible for Social Security.
Being proactive with your Social Security retirement benefits is essential. Make it a point to compare the income on your W-2 form with what the Social Security Administration lists as your income. Mistakes are sometimes made. You will want to ensure that your work record is correct, as your work earnings history is used to calculate your Social Security retirement benefit.
If you are healthy and want to enhance your benefits, wait until you are 70 to start collecting Social Security. This will give you a chance to maximize your work life. For every year you wait to retire, your monthly benefit will grow roughly eight percent. By postponing full retirement, you will collect the full benefit. The maximum Social Security benefit you can receive is $3,895 per month.
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