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Amplify your Social Security with this growth gameplan

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LA Post: Amplify your Social Security with this growth gameplan
April 11, 2024
Sowjanya P - LA Post

Since the Social Security system comes with many laws, rules, and guidelines, it's important to have the knowledge you need to make the best and smartest decisions for your financial future.  The complicated system can make it challenging to understand how to get your well-earned benefits but in this article, we will cover some of the more important rules you need to know before you start the process. This way, you can make sure you get the most money possible and have a comfortable retirement.

Whether you're on the cusp of retirement or planning ahead, understanding the intricacies of Social Security can significantly impact the amount of benefits you receive.  First, let's explore their method to determine your monthly earnings. They see your work history and the top 35 years where you raked in the most gap. All those yearly earnings get adjusted for inflation, and you get your "primary insurance amount," which sets the baseline for your monthly nut.

But if you didn't make it a full tenure of 35 years on the job for whatever reason, it gets a little trickier. Let's say you only worked 30 years in total. They'll take those 30 years of income but then average in 5 more years at zero dollars earned. And those zero-buck years aren't helping your cause; they'll chip away at your monthly payout.

Also Read: Column-Five new retirement numbers to know in 2024

The next key rule revolves around your age when you first file to start stacking that Social Security paper. This is called your "full retirement age" - 66, 67, or in between based on your birth year. That's when you qualify to receive 100% of that primary insurance amount we just ran through. But if you file before hitting your full retirement age, they'll take a cut off the top of your monthly payments until you check out for bond.

On the flip side, if you have a little patience and wait until after your full retirement age to start claiming (up to age 70 max), they'll hook you up with "delayed retirement credits". It's an 8% increase yearly, so if you wait three years, for example, that's nearly a 25% boost to your monthly payment.

But these credits stop adding up after you turn 70 years old. So unless you plan on living forever and working till you're frozen like Walt Disney, you should pull the trigger to start collecting by 70 at the latest to max out those credits.

Lastly, we have Medicare in the mix, which many people get twisted on. See, Medicare eligibility kicks in at 65 whether you claim Social Security or not. So you could play it smart - enroll in Medicare at 65 to lock in that health coverage first. Then, if you plan on holding off until 70 to get them delayed credits from Social Security, you can apply for the retirement benefits a few years after being on Medicare; it's that simple.

You could also take the opposite approach if that better fits your situation. Say you need Social Security dollars sooner than later. You could start claiming that income at 62 if required. Then, three years later, at 65, you can also reevaluate and sign up for Medicare coverage. The choice is yours.

The bottom line is, don't sleep on how these Social Security rules could impact your cheddar. Knowing how your benefits are calculated based on work history and age, taking advantage of delayed credits, and timing it all properly with Medicare is the key to maxing out your monthly payments in retirement. Do your homework, crunch the numbers, and make the best move for your personal finances. 

Also Read: BlackRock's Fink talks US retirement crisis, announces 'LifePath Paycheck' launch

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