Top 10 Ways to Maximize Your Social Security Benefits

Did you know that approximately 67 million Americans will be receiving a Social Security benefit per month in 2023? As an alternative, almost nine in ten Americans over 65 had received Social Security benefits by December 31, 2022. Social security benefits account for about 30% of the income of older people.

Knowing how to increase your Social Security benefits is crucial as they will be your primary source of income in retirement.

Many people don’t understand Social Security. They may also claim too quickly, miss out on vital benefits, or fail to use strategies that could increase their income.

These costly errors can be avoided by making these 10 essential steps to maximize your Social Security benefits during your golden years.

2023 Will See Big Changes in Social Security

No matter what your stage in retirement is, it is important to stay informed. Let’s start by reviewing the major changes that will affect Social Security and retirement in 2023.

Increases in COLA (cost-of-living adjustment).

The Social Security Administration will increase benefits checks by 8.7 percent in 2023. This is a significant increase from the 5.9 percent adjustment made for 2022. This COLA is 11.2 percent higher than it was in 1981.

Social security retirees will see an average $146 increase in monthly benefits starting January. This is due to the 8.7 percent adjustment. Retirees will now receive an average check of $1827, instead of $1681. Couples who receive benefits will see their estimated payments increase by $238 from $2.734 to $2.972.

CPI-W, the Consumer Price Index for urban wage workers and clerical workers, has been linked to the cost of living adjustments since 1975. The SSA compares the CPI-W of the previous quarter with the CPI-W of the current quarter to determine the COLA. The CPI-W changes are then used to adjust the COLA.

The maximum tax-free income is increasing.

Social security taxes were introduced in 2022 for maximum earnings of $147,000. This means that workers who contribute to the system pay tax on wages up to this amount. It is usually 6.2 percent.

In 2023, the maximum earnings will rise to $160,000. This means that more of a worker’s income will be taxable. Why is this happening? The adjustment was possible because of the higher average American wage.

Social Security benefits will also increase.

The Social Security benefit for workers who retire at full retirement age in 2023 will be higher, increasing from $3,345 up to $3,627. The full retirement age for those born after 1960 is 67. This applies also to retirees.

However, it is important to note that your maximum benefits if you retire before the full retirement age may be different as these benefits will be decreased. This is true even for people who retire before the full retirement age.

Spouses and disabled workers also see an increase in their benefits.

In 2023, benefits will be increased for widows and widowers as well as the disabled. These figures look like the following:

• A widowed mother of two children with two children can receive a substantial boost from $3,238 up to $3,520
• The benefits for widows and widowers who live alone at 65 or older will rise from $1,567 up to $1,704.
• The disability benefit for disabled workers who have a spouse or at least one child will increase from $2,407 — $2,616

These are only averages. Your situation and exact benefits may be different.

Social Security adjusts amounts exempted from the earnings test.

If you claim your benefits prior to reaching full retirement age, the Social Security Administration will withhold some of your retirement benefits. You can still claim a substantial portion of your benefits if you have retirement earnings that are exempt from the test. This is how the process will look in 2023.

You can earn as much as $1,770 per month ($21,240 per annum) before the SSA withholds your benefits. This is before you start to receive Social Security. You will get $1 for every $2 earned above the limit. The maximum exempt earnings for 2022 were $1,630 per month ($19,560 per year).

FYI: If you reach full retirement age within a year, this rule still applies but only until you reach full retirement age.

Benefits will be withheld at a $1 rate for each $3 earned over the limit in 2023, instead of $2 per $3 earned above that limit. In 2022, the ceiling was $4330 per month (51,960 per annum).

Full retirement will result in more benefits for workers who have retired.

The maximum benefits for Americans who retire at full retirement age in 2023 will increase depending on the year they were born. The maximum monthly benefit will rise to $3,627 per month from $3,345 per lună in 2023.

How to Maximize Social Security Benefits in 2023

Now that you have a refresher, let’s look at how to increase your Social Security benefits.

1. Postpone your application.

Your Social Security retirement benefits will increase by approximately 5% to 7 percent if you delay in claiming them. Between the earliest retirement age of 60 and your full retirement age, you can retire. For those born after 1960, this age rises to 67.

You will receive a greater return if you are able to wait until you reach full retirement age. Waiting until 70 to apply for benefits will give you 8% more. Why 70? This is the maximum benefit you can receive.

There are important things to consider before you decide to go this route.

People mistakenly believe they will not live long enough to claim benefits. According to a study done by The Brookings Institution, half of those who thought they wouldn’t live past 75 actually lived beyond that age. 75% of those who believed they would live to the age of 75 lived to that age.

Although the monthly benefit will increase each month that you wait to claim your benefits it’s not always a good idea to wait. If you live up to the average life expectancy, it doesn’t really matter whether you claim benefits early or later. Delaying your claim will result in a reduction in benefits.

However, most people aren’t necessarily average. People in poor health can benefit more if they apply early. A monthly infusion of benefits checks can help you manage your cash flow and pay off or reduce debt. This could lead to long-term cost savings.

2. Double-check your lifetime earnings.

It doesn’t really matter who you are, everyone makes mistakes. Even the Social Security Administration.

It is important to keep track of your income each year so you don’t make a huge mistake when applying for Social Security. Incorrect earnings records could result in you not getting the Social Security benefits that you are entitled to.

Incorrect earnings may be caused by a number of factors, including mistaken reporting by an employer or failure to process your name changes following a marriage or divorce.

To avoid any losses due to errors, ensure that your earnings statements are accurate each year. If you find errors, you may have to send your W-2s and pay stubs to the Social Security Administration. Once your claim is verified, the SSA will update your records.

You won’t likely have a paper trail going back at least ten, twenty, or more years. This makes it less likely that you can prove an error that occurred in the previous year if you have your records.

Good news! To view your earnings history, you don’t need to go to your local Social Security office. Why? This is possible online with my Social Security Account

If you find an error, please call 1–800–772–1213. You will also find details about Medicare, survivor, and disability benefits in your Social Security account. You can also start claiming your benefits immediately and receive a check as soon as you get it.

Originally Published on The Tech Trend