Social Security is a very complex system. Social Security was originally formed to allow older workers to exit the workforce without the risk of running out of money in retirement, while allowing room for younger workers to come into the workforce.
When Social Security was originally formed the average life expectancy was 62 years old. At the same time you could not claim Social Security until you turned 65. Due to advances in medical technology, we are now living longer than ever before and it’s crucial that you understand how to get the most out of your Social Security.
Below are just a couple of ways in which a person can maximize their Social Security benefit:
Today a person can take Social Security as young as age 62 but in doing so, you will receive a 25% permanent reduction from your benefits. Today, full retirement age is age 66. This is the point at which your benefits are 100% of what you are entitled to. However, between the age of 66 and 70 you can earn delayed credits for Social Security income in the amount of 8% per year. This means that you can experience a 32% increase above your full benefits by waiting until age 70 to claim your Social Security benefit.
Another strategy that is still available is called a restricted application. The restricted application allows a person to file for their spousal benefits at the age of 66 and receive 50% of their spouses benefit while at the same time allowing your benefit to continue to earn the 8% delayed credit.
While there are many other strategies that may increase the amount of your Social Security, it is critical to understand how Social Security fits into your overall retirement plan. For example, does it work with your tax strategy? Just because you find a way that Social Security can be maximized does not mean that that will automatically be the right answer for your unique situation.
Since the signing of the Social Security Act by President Franklin D Roosevelt almost 82 years ago, Social Security has become one of the most popular federal programs that has expanded and changed over the years. (The original document was a mere 29 pages while the current law is almost 2,600 pages long.) At the end of the day, it’s hard to predict what or when future changes to Social Security will occur so it’s important to make sure this important retirement program is properly used within your plan to maximize your benefits.
Have questions regarding your Social Security benefits? Call Barber Financial Group at 913-393-1000 and schedule a complimentary Social Security Analysis to make sure you are maximizing your benefits based on the particulars of your personal situation. You can also fill out the form below to request a meeting or visit our Education Center for more information.
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Investment advisory services offered through Barber Financial Group, Inc., an SEC Registered Investment Adviser.
The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.