Pump Up Your Social Security
A few days ago, CNBC’s Sharon Epperson shared her helpful advice on how to maximize your Social Security benefits.
Reporter: This morning on today’s Fountain of Youth: Maximizing Social Security Payouts. More than 52 million Americans who draw Social Security will not see a cost of living increase next year. But according to US News and World Report’ Fall Money Issue, there are ways to pump up your benefits. Sharon Epperson is the MSNBC’s personal finance correspondence. Sharon, good morning.
Sharon Epperson: Good morning.
Reporter: First, before we get to the ways to pump up your benefits, let’s talk about why no cost of living increase this year.
Sharon: No cost of living increases because it’s tied to consumer prices and consumer prices have been going down. This is the first time that there’s not going to be a cost of living increase since 1975. But President Obama is trying to urge Congress to have a $250 one-time fee paid to retirees.
Reporter: To compensate for that.
Sharon: To compensate for that, but there’s a lot of debate.
Reporter: But that may or may not pass.
Sharon: It may or may not pass.
Reporter: Okay, so let’s talk about what we need to do, then we’ll know what we need to do in terms of pumping up our benefits. You talk about delay claiming benefits and we’ve got a graphics here to tell you why it’s so important.
Sharon: Well, a lot of people maybe thinking, “I’m really strapped right now. I want to get the money as soon as I can.” But keep in mind if you delay your benefits, you can get a lot more money. If you take it at age 62, you will get 25 percent less money in your monthly check than if you wait until full retirement age at 66. So that will be $750, let’s say, for one payout example versus $1,000. You wait until age 70, for each year that you wait up until age 70, you’ll get an 8 percent increase. You can get as much as $1,320 on this example.
Reporter: And hand in glove with that is if you want to pump up your benefits, you should be working longer, right?
Sharon: That’s right. You should be working longer because what the Social Security Administration counts is your 35 highest paying years, so where you earn the most money. So if you are in your 60s and you’re making more money than you ever made before, you want to continue working.
Reporter: Okay, now, also there is a way to take spousal benefits and keep working. What is that about?
Sharon: Well, there are two ways that you can get benefits if you’re a couple. One is you can get a spousal benefit. That’s 50 percent of your spouse’s benefit or you can get your own benefit. You can’t get both, but you can get one or the other and you probably want to take whichever is higher.
Reporter: Okay, and couples can maximize just simply doing what?
Sharon: Well, they can maximize it by taking a look at what their retirement age is. Hopefully, they’re going to wait until full retirement age, but the reality is some couples may not be able to do this. So if you’re the lower-earning spouse, you want to take it early, but wait for the person who is making more money to take their benefit after retirement age, if possible.
Reporter: So then one or the other should be delaying retirement, right?
Sharon: If possible.
Reporter: Depending on who is making the most?
Sharon: If possible.
Reporter: Okay, also, life expectancy is a major factor. What’s your best advice on how we should factor that in?
Sharon: Well, everyone is going to say, “Wait a minute. I don’t know if I’m going to live until 70. I really want to take this money now.” It really depends on your genetics, on your parents’ life expectancy per se, and your health.
Reporter: You’re going to make a guess.
Sharon: You have to make a guess, but a good way to make an educated guess is to go to Livingto100.com, a very good calculator to help you figure out what your life expectancy is going to be.
Reporter: Well, Sharon Epperson trying to help us in our waning years.
Sharon: That’s right.
Reporter: Thank you so much.
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