Here’s How You Can Unleash the Potential of Your Social Security Income 

As you approach the golden retirement phase, it’s a celebration of the years of diligence and hard work. Now, it’s about embracing a life crafted by your choices. If Social Security is slated to be a significant slice of your retirement income, it’s crucial to be well-versed with certain strategies before you bid adieu to your professional life and start claiming your monthly benefits. Here are five pivotal considerations to help amplify your Social Security benefits:

Extend Your Employment Through the Year: 

Your Social Security benefits are computed based on your top 35 earning years. If your working years fall short of 35, fret not; you can still claim benefits. However, for each year less than 35, a zero is factored into the calculation, which could lower your benefits. The earnings the Social Security Administration (SSA) considers align with the income you declare for tax purposes, corresponding to the calendar year. Hence, extending your employment through the end of the year or completing 35 working years could be beneficial if feasible.

Consider Working an Additional Month or More: 

If you’re unable to work all year, even a few extra weeks can be beneficial, especially if you’ve reached your Full Retirement Age (FRA). For every month you delay claiming benefits past your FRA, you accrue credits, albeit less than 1% for each month, which could increment your monthly benefits once you start claiming them. This accrual stops at age 70 with no financial incentive to delay benefits.

Explore Spousal Benefits: 

Spousal benefits could be a lucrative option if they provide a higher benefit amount than retirement benefits based on your earnings record. This provision allows a spouse to receive up to half of the higher-earning spouse’s retirement benefits. However, certain conditions apply, such as the age requirement of 62, having a child under 16, or receiving Social Security disability benefits. It’s prudent to consult with the SSA to understand how this option could impact your benefits.

Reside in a Social Security Tax-Friendly State: 

While this doesn’t directly amplify your Social Security benefits, residing in a state that doesn’t tax Social Security income could help you retain more benefits. Only 12 states levy taxes on Social Security benefits to some extent. It’s important to note that Social Security benefits can be subject to federal taxes based on income, regardless of state.

Understand the Earnings Limit if You Continue Working: 

If you plan to continue working while claiming Social Security benefits, it’s vital to comprehend the earnings limit. For 2024, if you haven’t reached your FRA, the SSA will deduct $1 from your benefits for every $2 earned above $21,240. Although these deductions are credited back to you, leading to higher future payouts, they could disrupt your immediate income expectations. After your FRA, no such deductions will impact your employment income.

In conclusion, as you transition into retirement, being informed and making strategic decisions regarding your Social Security benefits can significantly influence your financial comfort. Whether extending your employment, exploring spousal benefits, or understanding the tax implications, each step could contribute towards a more financially secure and enjoyable retirement.