Many seniors end up relying on Social Security benefits for a significant portion of their retirement income, although these benefits are meant to be supplemented by savings. Taking steps to make benefits bigger can help people to have more financial security during their later years -- especially if their nest egg is a little smaller than they'd like it to be.
The good news is, retirees actually can do a lot to increase their Social Security benefits -- even pretty late in life. In fact, by making one simple move, seniors can squeeze an extra 24% out of their benefits. Here's how.
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This decision can increase your Social Security checks by 24%
If you want to increase your monthly Social Security check amount by 24% compared to your standard benefit, you're going to need to put off filing for benefits until the age of 70 -- even though you could choose to first file when you're just 62.
Delaying your benefit claim until 70 results in a 24% increase to your standard benefit because of delayed retirement credits. You're entitled to receive your primary insurance amount (PIA) -- which is based on your career-average wages -- if you start your Social Security checks at your full retirement age (FRA). FRA is between 66 and four months and age 67. For each month after FRA that you forgo your check, you're rewarded with a delayed retirement credit that increases your PIA by two-thirds of 1%.
In total, delaying your benefits claim for a full year would earn you 12 of these credits and raise your standard benefit by 8%. That means if your FRA is 67 and you're able to wait a full three years before starting your benefits at 70, you'd get a 24% boost to your standard benefit.
Will earning a 24% benefit increase be possible for you?
Getting Social Security checks that are 24% higher than your standard benefit is a really attractive proposition.
Social Security benefits are not designed to provide enough income to live on, as they replace only around 40% of preretirement earnings. But they're still one of your most important retirement income sources because they're guaranteed to continue indefinitely as long as you're alive -- unlike savings, which can run dry. If you become increasingly reliant on Social Security as you get older and your nest egg dwindles, a higher monthly benefit can really pay off.
Unfortunately, earning that 24% benefits boost is trickier than it seems. That's because you'll need enough income to support yourself until 70 without getting any of it from Social Security. If you can work until 70, your paychecks should be able to cover your costs -- but chances are good that won't happen, since many people are forced to quit sooner due to lack of work, health issues, or family issues.
If you can't keep earning a paycheck until claiming Social Security at 70, the only way you'll be able to put off your benefits claim is to get enough money from savings or other sources, such as your spouse's benefits. You'll need to plan ahead to build a big nest egg and coordinate a Social Security-claiming strategy with your spouse to make this happen.
While it may require planning and perhaps some sacrifice on your part, earning a 24% Social Security benefits bump may be well worth it.
