Are you seeking for an extra income source? Then, you have
reached your destination. Here, you are going to know about the Social Security
payment that you can consider as an additional source of income that will
benefit you a lot. At the time of the introduction of the Social Security in
1935, it was never envisioned to be a major source of income that could assist
people even in the retirement age. Instead of, the major goal of the Social
Security was to give a safeguard way to people who were not capable of
gathering enough retirement funds as a part of saving.
At that time, most of the Americans never considered the
Social Security due to shorter lifespans and the dependency on assured
pensions. However, these days, a million of people in the USA have taken the
Social Security benefits into account as they have become aware of it. When it
comes to taking the complete advantage of the Social Security, it is important
to have a proper planning. Without the planning, people cannot secure the
lifetime income adequacy. At the same time, the experts also reveal that longevity
is more essential than ever so that people can maximize the Social Security
advantage in any manner. Thinking of the Social Security as an allowance for
your entire life is an ideal thing.
Go with the proper planning
The major fact to know about the Social Security is that it
is just 8% assured investment around and it is also backed by the federal
government. When you are going to plan for availing the benefits of the Social
Security, there are lots of things that can make the advantages to reach the
optimal stage. The below-mentioned tips and tricks will help you in
accelerating the size of the Social Security check to a great extent.
Max out paychecks via full retirement age
According to the Social Security Administration, they
calculate the benefit in the form of the amount that are dependent on the
paychecks. It means that the higher you earn, the more your benefit amount will
be. If the earnings are above the yearly cap, they are remained out of the
calculation. The tip here is to maximize the peak earning years, which struggle
to earn that reaches the cap level or higher than this. People, who are not
retired yet, seek ways to boost their income by taking part in the part-time
work or having a side business. But they are not aware of the impact of these
things on the income, this may reduce their income that come from the Social
Security.
Get indulged in the work for full 35 years
Make sure that you have covered all the basics of the Social
Security prior to thinking about taking the benefits into account. It is also
an essential thing to know that the SSA has a criterion to calculate the final
benefit amount according to the lifetime earnings. It covers your highest 35
years of history related to your work. They sum up your earnings of your greatest
thirty five years and averages by making use of an AIME (Average Indexed
Monthly Earnings) formula. In any case if you started the job late or suffered
from unemployment, there is nothing to count them. This period seems to be
zero. According to the formula, it brings down the average because of zero
count. If you work 35 years, then each extra year of earnings will replicate an
earlier year of lower earnings. This will impact the average by increasing it.
Get the spousal benefits and make sure to delay yours
It is one of the most effective and reliable ways of adding
an extra advantage to your Social Security amount. In the case, if you and your
partner were born in the year of 1953 or earlier and have both entered the full
retirement age, it is a wise idea to claim the benefits of your spouse and
allow your own Social Security benefits keep increasing. Once you enter the age
of the 70s, it is the right time to switch to your greater benefit. There is
one important thing you need to note is that you cannot have appealed your own
advantage in any situation if you are willing to use. This is why it is called
as restricted application if you opt for spousal benefits to be claimed.
Delay Social Security benefits
The next option you can use is to delay the benefits. It is
a tendency that most USA citizens are familiar with their full retirement age
or simply FRA. The FRA is the Social Security age at which you can receive the
complete benefits. Until you reach FRA and you are delaying the benefits, you
can earn an 8 percent return yearly on your available benefits. It states that the
amount of the benefit boosts by 8 percent every year that it is delayed until
the age of 70 years. It is being done according to the DRCs (Delayed Retirement
Credits) obtained for every year that you delay your benefits of SS.
Neglect Social Security Tax
A tax also plays a great role in receiving the complete
benefits of the Social Security. In order to add a greater amount to your retirement
income, then the tax consequences should be known. You must be familiar with
the fact that anywhere that ranges from 50-80 % of your Social Security benefit
amount can be subject to Federal taxes.
There is a proper strategy to calculate your tax on the
Social Security benefits. For that reason, the Internal Revenue Service will
supplement your non-taxable interest and also the half of the SS income to your
AGI or Adjusted Gross Income. If you are capable of avoiding paying of the tax
on your SS income, then you can really benefit your SS amount in a positive and
effective manner. You can consider ways to spread out the income from several
sources that may not promote a higher tax.
