Maximizing Social Security Benefits: While the average Social Security check won’t buy much luxury, it can at least assist finance an opulent lifestyle if you plan and figure out how to optimize it. The first stage is to aim for a retirement income that is higher than the average, which as of April 2024 was just $1,866.44 per month (Social Security Administration).
The maximum monthly benefit that you may receive in 2024 is $4,873, although very few people who receive Social Security receive that much money. For at least 35 years of your working life, your income must have equaled or exceeded Social Security’s maximum taxable income to be eligible.
The amount of wages on which Social Security taxes are paid after being subtracted from your earnings is known as your maximum taxable income. According to Yahoo Finance, the annual maximum taxed income in 2024 is $168,600. Any income over that is not taxable by Social Security. Every year, the amount is modified to account for changes in the federal minimum wage.
How Much Should You Contribute to Increase your 401K and which type of Employee see better returns?
To receive the largest potential payout, you must also wait until you are 70 years old to begin claiming benefits. The earliest age at which you can file is 62, but the longer you wait, the higher your monthly payment will be. There is no longer any advantage to waiting after age 70.
Here are three ways you can extend your Social Security benefits for an opulent lifestyle if you’re planning a retirement or have already retired but aren’t collecting yet.
The best money secrets are known only by the wealthy. Discover how to imitate them.
Take Your Time Making a Claim
Don’t start claiming benefits from Social Security early if you want to maximize your payments. It is recommended that you hold off until you attain full retirement age (FRA), which varies based on your birth date and is now either 66 or 67. Up to the age of 70, your benefit will increase by 8% year after that. Your total monthly payment will grow by more than three-quarters if you wait until you are 70 as opposed to collecting at age 62.
Select the Appropriate Spousal Approach
The primary beneficiary’s payment is directly related to the spouse’s Social Security benefit, which is based on the spouse’s record rather than their own. Your spousal benefit will also be permanently lowered if your spouse files for benefits at age 62. It’s also important to remember that spouses are not eligible for the standard age 70 rule because their payout is limited to 50% of the primary beneficiary’s whole retirement amount. Your maximum benefit is still 50% of your spouse’s FRA benefit amount even if they wait until age 70 to start receiving Social Security benefits.
COLA Increase 2025 Calculator: Find Out How the Next COLA Increase is being determined?
Relocate to a State Where Benefits Are Not Taxed
Relocating to a different state can help you maximize your benefits if you live in one of the states where state income taxes are still applied to Social Security payments. As of May 2024, this is where you will pay state income taxes on Social Security:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
