Did you know that 61% of Social Security retirement benefit recipients receive at least half of their income from Social Security? And, 33% of beneficiaries rely on Social Security for 90% or more of their income. With that being said, how can I get the most from my Social Security benefit?
In 2017, the maximum benefit for someone retiring at Full Retirement Age will be $2,687 per month. That is an increase of $48 per month over the 2016 maximum of $2,639. On an annual basis, the 2017 amount will produce $32,244 in income.
However, the one thing that affects the true maximum benefit from Social Security is the age at which you decide to file for benefits. The above amount assumes that you take your benefits at Full Retirement Age, which is 66 for those who were born in 1951 and retiring in 2017. If you claim your benefits earlier than Full Retirement Age, you get less. At age 62, this benefit amount would be $2,153 per month. On the other hand, if you wait until age 70, that amount increases with Delayed Retirement Credits to $3,538 per month.
Yet, the main reason why most people don’t acquire the maximum benefit is simply because they don’t earn enough money throughout their careers. Social Security looks at the highest-earning 35 years of your work history to determine your benefit amount (PIA), adjusting earlier earnings for inflation to determine your average indexed monthly earnings.
Social Security is a progressive program, which means it is designed to replace more pre-retirement income for low earners and less for high earners. Also, Social Security only gives workers credit for the amount they earned up to a certain wage cap – in 2017 this cap is $127,000.
That means in order to qualify for the maximum amount payable to beneficiaries; you must have earned at least the wage base limit for 35 years of your career. For most Americans, earning a salary of $127,000 or more is an unrealistic goal. But that should not keep you from working toward that goal – remember your benefit is based on your top 35 years of earnings, so keep plugging away.
When reviewing your situation collectively with your spouse’s earnings, as we do at Pillars LLC, you can improve your lifetime benefit by utilizing claiming strategies. Timing is critical in the Social Security world when it comes to benefits. Don’t settle for less than you are entitled to, because of not knowing.
Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.
