We all want to have a good pension when we reach our retirement. Who doesn’t want to enjoy a comfortable old age? However, in order to receive a good retirement check from the S.S.A. every month, we must put in the effort and strategy decades in advance. It breaks our hearts when we see stories of people over 70 having to work to pay all their bills.
These are cautionary tales, and while we would love to laze in the sun during our summer years, we should be like ants, and store enough grain during the good weather before the cold sets in. Winter is coming for all of us, sooner or later.
It is best to retire with some money saved on our own. But even if we manage our retirement savings wisely and gradually withdraw money from our IRA or 401K account, there is no guarantee that we won’t run out of money. That’s why the more we maximize our Social Security benefits, the more financially stable we will be in our retirement. Here are three strategies to ensure that.
Boost your earnings with a second job
Up to a certain limit, the more money you earn, the higher your Social Security checks will be during retirement. However, it’s not just your salary that counts toward future benefits. All income you earn and pay taxes on counts toward Social Security. That’s why, if you can supplement your salary with a little extra work, you could end up receiving much more money from Social Security in the future.
Plus, this extra income will help you maximize your IRA or 401k year after year. This strategy definitely kills two birds with one stone.
Postpone your retirement as much as you can
If you wait until full retirement age, you are entitled to receive your full monthly Social Security benefits without any reduction. For people born after 1960, this retirement age is 67.
On average, for each year you delay claiming benefits after full retirement age, you will receive an 8% increase in your pension. This incentive gradually increases until you reach age 70.
This strategy depends largely on how you feel: if you really enjoy your job, it is not physically or mentally exhausting, and it helps you feel active, you can stay in the labor market for more years. If, on the other hand, you see that your branch of the family has died relatively young (not everyone has relatives who have consistently reached the age of 95), you may prefer to enjoy your retirement as much as possible, rather than looking forward to your Social Security pension.
Get out of retirement
If you did what rock stars do and retired only to regret it and want to go back to your old ways, you can apply for this option starting at age 62. If you retired but regret it or simply want to return to the labor market, you can submit an application to Social Security within 12 months of your retirement.
All Social Security beneficiaries can reapply for benefits once in their lifetime. If you repay the Social Security Administration for all benefits received, you can reapply for them later, which will result in higher monthly payments.
Although it is not a good idea to retire relying solely on Social Security benefits, these pension checks could end up representing a significant portion of your income as a senior citizen. Therefore, it is a good idea to try to get as much as possible from Social Security. Considering that Social Security accounts are expected to run out in 2034, it is best to maximize the benefits we will have access to.
Although no one likes to work overtime, these strategies, which require effort now, could greatly improve our quality of life when we retire. Therefore, it is worth doing everything possible to increase our income during our working years and delay our retirement age if our health and work allow it.