Social Security is an integral source of income for millions of seniors. In fact, around three-quarters of retirees say they rely on their benefits significantly, according to a 2022 survey from The Motley Fool.
So it's crucial to ensure you have the right strategy to maximize your monthly checks. If you're closing in on retirement, there's one important question to ask yourself before you start taking Social Security: How much will you collect in benefits per month?
Image source: Getty Images.
Why it's critical to know your benefit amount
Before you begin claiming, it's wise to know approximately how much to expect in benefits. If you don't know your benefit amount and it ends up being lower than you anticipated, it could spell trouble for your retirement.
Your benefit amount is based on several factors, including:
- The number of years you've worked
- Your earnings throughout your career
- The age you begin claiming
- Your marital status (as you could be eligible for spousal or divorce benefits)
The age you start taking Social Security will have an especially significant impact on your benefit amount. Age 62 is the earliest you can file, but you'll receive smaller checks the earlier you begin claiming.
To collect the full benefit amount you're entitled to, you'll need to wait to file until your full retirement age (FRA). While your exact FRA will depend on your birth year, it will fall between the ages of 66 and 67.
How to easily check your benefit amount
Even if you're not retired yet, there's a simple way to check your benefit amount online. First, you'll need to create a mySocialSecurity account, if you don't have one already.
Once logged in, you can check your statements for an estimate of your benefit amount based on your real earnings and work history.
Keep in mind, though, that this estimate assumes you'll file for benefits at your FRA. If you begin claiming earlier, your monthly payments will be permanently reduced by up to 30%. By waiting until after your FRA to file, you'll receive your full benefit amount plus up to 32% extra each month.
Once you have an estimate of your future benefit amount, it's a little easier to tell whether your finances are on track for retirement. If Social Security is going to be a major source of income, it's especially important to have an idea of how much you can expect.
Simple ways to increase your benefits
If you find that you'll be receiving less than you expected from Social Security (or if you simply want larger checks), there are ways to increase the size of your payments.
Perhaps the simplest way is to delay claiming benefits. Waiting even a year or two to start taking Social Security can result in hundreds of dollars more per month. While this option won't be a good fit for everyone, if you're looking to maximize your monthly income, delaying benefits is one of the most effective ways to do it.
If you're able to increase your income, that could also help. The Social Security Administration calculates your basic benefit amount (or the amount you'll receive at your FRA) by taking an average of your wages over the 35 highest-earning years of your career. Increasing your income will result in a higher earnings average -- and a larger benefit.
There's a lot of planning involved in retirement, but it's worth the effort. By getting an estimate of your future benefit amount before you start taking Social Security, you can ensure you're as prepared as possible.
