Maximizing Your Social Security Benefits

When should I file for benefits?
Choosing when to retire is one of the most important decisions you will have to make. But the date you retire and the date you start collecting Social Security can be different. The decision of when to begin receiving benefits is a personal one, and working with a financial professional is essential to ensure you make the best decision for your situation. First, it is important to know your Full Retirement Age (FRA). From there, you can decide to receive:

• Full benefits at full retirement age
• Reduced benefits as early as the first full month you reach age 62
• Increased benefits, if benefits are delayed beyond full retirement age to as late as age 70

Can I work and still receive benefits?
Yes. In fact, working beyond full retirement age may increase your benefits. And once you enter the month in which you reach FRA, the money you earn will not reduce your Social Security benefits. But many of us will need to begin benefits before we reach FRA. In that case, it is important to understand earnings limits. According to the Social Security Administration, if you work, but start receiving benefits before full retirement age, $1 in benefits will be deducted for each $2 in earnings over the annual limit (in 2012 the limit is $14,640). In the year you reach your full retirement age, your benefits will be reduced $1 for every $3 you earn over the annual limit ($38,880 in 2012) until you reach full retirement age.

Can I estimate what my benefits will be?
Yes. Generally, your Social Security benefit is a percentage of your average lifetime earnings. You can go online to  www.SSA.gov to get your individual estimate.

What is the maximum benefit available?
According to the Social Security Administration, the maximum monthly Social Security retirement benefit for a worker with retirement at age 66 in 2012 is $2,513. Your maximum benefit will depend on the age in which you choose to retire.

How are my benefits calculated?
A common misconception is that workers who earn 40 credits will receive the maximum benefit amount. This is not the case. Credits are the building blocks used to determine whether you have the minimum amount of work to be eligible for benefits. 

The benefit amount is not based on the credits, but rather your earnings history and date of birth.  Although the Social Security Administration provides benefit estimates, you may want to learn about how your benefits are calculated or perform the calculation yourself.