Are you nearing retirement age? If so, there has been a change made to Social Security that might impact you.
The biggest change went into effect on January 1, 2017. The full retirement age was raised to 67. This is the age at which a person may first become entitled to full or unreduced retirement benefits.
Full retirement age has been slowly climbing since President Reagan signed the Social Security Administration Amendments of 1983. The full retirement age is now 67 for anyone who was born after 1960.
No matter what your full retirement age is, you may start receiving benefits as early as age 62 and as late as age 70. If you start collecting benefits early, they are reduced a fraction of a percent for each month before your full retirement age.
This chart, from the Social Security Administration, lists age 62 reduction amounts and includes examples based on an estimated monthly benefit of $1,000 at full retirement age:
With modifications being made to Social Security benefits, we're going to give you some ideas on how to plan for retirement.
We also found some terrific online calculators that do the heavy lifting for you too later on in this tip!
How to maximize your Social Security benefits
Once you do retire, obviously it's best to receive the largest benefit check possible. If you're not at retirement age yet, here are some ideas to help accomplish that goal:
Try boosting your income
It's helpful to know how your benefits are calculated. This is how the Social Security Administration explains this on its site:
"We base Social Security benefits on your lifetime earnings. We adjust or 'index' your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.
"We apply a formula to these earnings and arrive at your basic benefit, or 'primary insurance amount.' This is how much you would receive at your full retirement age."
Since your benefits are based on how much you earn, the more you make the more you'll receive. It couldn't hurt asking for a raise from your employer.
On top of that, you might want to consider working a second job. This can be difficult with our busy schedules these days but it would pay off in the end.
Don't collect benefits early
It wasn't uncommon in the past to retire and begin collecting Social Security benefits early.
As you can see from the chart earlier, the longer you wait to collect your benefits, the more you receive per month. If you wait to collect benefits until after your full retirement age, you'll get even more each month.
Benefits increase each year you wait beyond your full retirement age and stop increasing at age 70. You'll receive 132 percent of your monthly benefits if you wait until you're 70 years old to collect.
Utilize planning tools
Having a plan for retirement and successfully executing it can be tricky. There are tools out there that can help.
Social Security Benefits Calculator
AARP has an interactive calculator that will help you figure out how much retirement income you'll receive at different claiming ages. This will help you decide when you should start claiming your Social Security benefits.
There are just four simple steps: Personalization, see your payout, maximize your benefits, and what it all means.
Click here to use the AARP tool.
Note: This calculator does not display on mobile devices.
Maximize My Social Security
Maximize My Social Security is a simple, but comprehensive tool designed to help you get the highest benefits from Social Security. Watch this video to see how it works:
Features include a web-based platform and a side-by-side comparison of chosen and optimal strategy. There is a license fee of $40 for an individual household that is good for one year from the date of purchase. If you're not satisfied, it comes with a money-back guarantee.
Click here to utilize this tool.