How to Receive More in Social Security Retirement Benefits

Planning on retiring and applying for social security as soon as you are qualified?  Well, maybe you shouldn't, particularly if are in good health, believe you will live for a few decades after you retire, and have little or nothing saved for retirement.  One of the best ways you can make up for not having enough savings in retirement is to delay applying for social security benefits.  If you do this, your monthly check will increase significantly.

How much more can you receive in benefits by delaying retirement ?  You can receive about 7 percent more in benefits if you receive your first social security check at the age of 70 rather than 65.

For example, a person retiring at the age of 65 who qualifies to receive $1,613.00 per month in social security benefits would receive $2,214.00 per month if she waited until she was 70 to apply for social security.  That is $601.00 more per month or $7,212.00 per year; however, in her case the financial benefit doesn't come about for 15 years.

Using the numbers from the paragraph above, the table below compares what this hypothetical person would receive in social security benefits if she retired at age 65 and at age 70:

Situation 1:

Retires at 65 and dies at 80 (15 years):  $290,340 (1613 x 180 SS checks)
Retires at 70 and dies at 80 (10 years):  $265,680 (2214 x 120 SS checks)
Difference                          - $  24,660

Result:  This person does NOT benefit by retiring later since she missed out on receiving $24,660 in social security benefits.

Situation 2:

Retires at 65 and dies at 85 (20 years):  $387,120 (1613 x 240 SS checks)
Retires at 70 and dies at 85 (15 years):  $398,120 (2214 x 180 SS checks)
Difference           + $ 11,400

Result:  This person has benefited by retiring later since she has now received $11,400 more in SS benefits by retiring at age 70 rather than age 65
Budgeting >  Increase Social Security Benefits
Situation 3:

Retires at 65 and dies at 90 (25 years):  $483,900 (1613 x 300 SS checks)

Retires at 70 and dies at 90 (20 years):  $531,360 (2214 x 240 SS checks)

Difference + $ 47,460

Result:  This person has benefited by retiring later since she has now received $47,460 more in SS benefits by retiring at age 70 rather than age 65
Situation 4:

Retires at 65 and dies at 95 (30 years):  $580,900 (1613 x 360 SS checks)
Retires at 70 and dies at 95 (25 years):  $664,200 (2214 x 300 SS checks)
Difference           + $ 83,520

The above illustration shows how retiring at age 70 rather than at age 65 can make up for the failure to save enough for retirement.  It is estimated that about 70 percent of Americans have little or nothing saved for retirement and will depend heavily on social security during their retirement years. Retiring later could make a significant financial difference.

Consider retiring later if you (1) have no other source of retirement income; (2) have little or nothing saved for retirement; and (3) are in good health and think you will live a long time beyond your age of retirement.

Use the information contained in the statement the Social Security Administration sends you each year to determine if retiring later would be financially beneficial to you.  You can also visit the SSA website at www.ssa.gov.   You can find a calculator at their website that you can use to determine your benefits at different retirement ages. 

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