3 little-known ways to earn more Social Security checks | Smart Change: Personal Finance
Millions of seniors get Social Security benefits when they retire, and some rely on monthly checks for the majority of their income.
Although Social Security was never designed to be your primary source of income, it pays to ensure that you get as much as possible. Your benefits can go a long way in retirement, especially if you have little savings.
One of the best ways to increase check volume is to delay claiming Social Security. However, there are a few other less popular options that can also help you earn larger monthly payments.
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1. Work at least 35 years
The Social Security Administration calculates your benefit amount by taking your 35-year average salary from the highest earnings of your career. This number is then adjusted to account for inflation, and the result is the amount you would receive if you started claiming at full retirement age (FRA).
If you have worked less than 35 by the time you apply, you will have zeros included on average to account for the time you were not working. This will result in lower average income and less money in interest.
Even if you’ve worked a full 35 years already, working a little longer can still be beneficial. You probably earn more now than you did 35 years ago. And since your average is based on the years you earn the most, working an extra year or two when you earn more can give you a higher amount of benefits.
2. Take advantage of other types of benefits
Retirement benefits are not the only type of benefits you may be eligible to receive. In some cases, you may also qualify for spousal benefits, divorce benefits, or inheritance benefits.
Marriage and divorce benefits allow you to claim based on a partner’s or previous partner’s work history. Either way, the most you can get is 50% of the amount your ex-husband is entitled to in his FRA.
If you are financially dependent on a loved one who has passed away, you may also qualify for a survivor’s benefit. Although inheritance benefits are usually for widows and widows, sometimes they are also available to parents, children, divorced spouses, and other family members.
3. Contribute to a Roth account
Your Social Security benefits can be subject to state and federal taxes in retirement. Your state taxes will depend on where you live, while federal taxes will depend on a factor called your temporary income.
Your temporary income is half the amount of your annual benefits, any non-taxable interest, plus your adjusted gross income. If your temporary income is above $25,000 per year (or $32,000 per year for married couples who file taxes together), you will owe taxes up to 85% of the amount of the benefit.
However, withdrawals from Roth accounts—such as a Roth IRA or a Roth 401(k)—do not count toward your temporary income. If you withdraw a large amount from this type of account, it will likely lower your temporary income enough to reduce or even eliminate your federal taxes — helping you retain a larger portion of your benefits.
Your benefits can help you afford a more comfortable retirement, and it’s wise to make the most of them. With some creative strategies, you can take every penny out of Social Security.
The $18,984 Social Security bonus is totally overlooked by most retirees
If you’re like most Americans, you’re behind on retirement savings for a few years (or more). But a few little-known “Social Security secrets” can help ensure a higher retirement income. For example: One easy trick can pay you up to $18,984 extra…every year! Once you learn how to maximize your Social Security benefits, we believe you can retire with confidence with the peace of mind we all seek. Simply click here to discover how to learn more about these strategies.
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