Charles H. Miller
The Employee Benefit Research Institute has estimated that 84 percent of U.S. workers expect their Social Security benefit to be a significant source of income during retirement. So, it makes sense to know what you will be entitled to once you decide to retire. Also, there are some things that could be done to increase the benefits — so plan ahead. And we’re trying to help…
1. Check Earnings on Your Social Security Statements
The Social Security Administration (SSA) is mailing Social Security Statements to workers at ages 25, 30, 35, 40, 45, 50, 55, and 60 and over, who aren’t yet receiving Social Security benefits and don’t have a “my Social Security” account. Typically, these statements get to your mailbox some three months before your birthday at each one of those ages.
Inside one of those statements you should look for reported earnings for each year to make sure they match your W-2 forms. The SSA uses your average earnings over lifetime to calculate the benefit amount, so any errors on reported earnings may alter the benefit to which you’re entitled.
You are the only one who can catch any errors here — especially if you had many employers in the past — so make sure to spend some serious time looking into the numbers.
Then, if you notice something’s wrong, contact the SSA by calling them at 1-800-772-1213 to resolve the issue. Just make sure, your W-2 and/or tax returns are ready — cause they will ask for them.
2. Open a “my Social Security” Account
If you don’t want to wait for your reported earnings to get to your doorstep, you can open a “my Social Security” account and check them once a year to verify that everything’s properly accounted for.
As part of the same account, you will also receive updated estimates of your future retirement, disability, and survivors benefits. And if you lose your Social Security card, you can ask for the new one from here.
3. Wait With Retirement
Except if you win a lottery or make some extraordinary move with your investment money, you’ll want to wait for your full retirement age. Otherwise, benefits you get when you reach the age of 62 are not what they could be if you postpone your retirement for another few years. To put it in perspective, those retiring at the age of 62 get 75 percent of what they would be four years later.
Uncle Sam wants to you work longer and for every month that you delay retirement past age 62, you gain an additional 0.4 percent in retirement benefits until you reach the full retirement age, which is somewhere between 65 and 67.
Furthermore, if you feel healthy and want to keep contributing – consider delaying retirement until the age of 70. That will increase your benefits up to 132 percent while giving you an extra something to live for.
For what it matters, today we live for longer than ever before in human history.
4. Check Spousal Benefits
The SSA allows spouses to claim retirement benefits based on their own earnings record or receive up to 50 percent of the higher earner’s benefit, whichever is higher.
There is one catch for those retiring at the age of 62, though; then the spousal benefit is reduced by 25/36 of 1 percent for each month before full retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of 1 percent per month.
It becomes a bit complicated to do the math, but the conclusion is rather simple — do not retire before reaching the full retirement age. Again, except if you have some other source of income or if the math says otherwise (the next section is about that).
Another thing to know is that those divorced from a marriage lasting 10 years or longer also get to benefit from their ex-spouse’s benefits. The only requirement is that they remain unmarried, though there are some exceptions for which we advise you to consult the SSA website.
5. Children Bring Additional Benefits
Retirees are entitled to receiving additional Social Security payments if they have dependent children under age 19 living with them during retirement. This rule is valid for a biological child as well as adopted child, stepchild, or dependent grandchild; as long as he/she is unmarried and under age 19, he/she can receive up to the half of your monthly retirement benefit. The benefit can extend until graduation date or two months after the 19th birthday of a dependent who is a full-time student (no higher than grade 12), whichever is earlier.
There is one catch, however. No matter how many children you have, the total amount you and your family can receive is about 150 to 180 percent of your full retirement benefit. You should do the math to figure out whether it is beneficial for you to retire earlier as these combined benefits could be higher than what you would receive when your children get older.
