Your Social Security retirement benefit is based on your lifetime earnings. The higher your earnings, up to a maximum taxable amount of $137,700 a year, the higher your benefit.
If you’re in good health and don’t have enough put away to maintain the standard of living you’re accustomed to, then keep working. As you near retirement, you may well be at the top of your earnings game, allowing you to maximize your Social Security benefit and your savings for retirement.
If both people are in good health, delay claiming your benefit until age 70 to collect the highest payout possible.
Congress is phasing out this option, too. Anyone born on or before Jan. 1, 1953, however, is grandfathered in and will still be able to file a restricted application.
Look before you leap. Each person’s situation is different so the decision to take the benefit early is a personal one.
To maintain your standard of living in retirement, financial experts say you’ll need about 70 percent of your current income. As a result, financial planners have long recommended that Social Security benefits be viewed as just one leg of a “three-legged stool” needed for financial security in retirement.
Social Security is perhaps the strongest leg of the stool, providing 37 percent of all income for Americans age 65 and older. It’s especially important to older Americans with lower incomes. Nearly a fourth of all Social Security beneficiaries have no other source of retirement income.
Women today who reach age 65 outlive men, on average, by 2.3 years (86.6 years versus 84.4 years). With their longer lifespans, women tend to live more years in retirement than men, are more likely to be widowed and are at greater risk of exhausting their sources of income.
Claiming the spousal benefit before your full retirement agewill trigger Social Security’s benefit-reduction—or “deeming”—rules. If you retire at age 62, for example, your benefit could be as little as 32.5 percent of your spouse’s primary insurance amount. If you wait until full retirement age, your benefit could be 50 percent of your spouse’s benefit amount.
You can get Social Security retirement benefits and work at the same time, increasing your household income. Now the not-so-good news: Social Security will reduce your benefits but only if you are younger than your full retirement age and your earnings exceed certain yearly limits.