Most people who are planning for their retirement years are going to be building around Social Security as a centerpiece. But even if your resources would allow you to enjoy retirement to the fullest if you did not receive Social Security, since you did make contributions into the program it is only natural that you would expect something in return. One could simply invest his or her Social Security benefits and add the earnings to the estate that family members will draw from in the future.
All Americans receive statements from the Social Security Administration periodically that let you know the amount of benefits that you can expect once you reach full retirement age. These benefits are calculated based on your 35 highest earning years. Because of this fact and another incentive that is offered you can potentially increase the amount of your benefit by working beyond your full retirement age.
Let’s say your full retirement age is 67 but you choose to work until you’re 70 and don’t apply for Social Security until then. If you earn more per year during those three years than you did during any three years that previously were among your 35 top earning years the amount of your benefit would increase as a result of your choice to work beyond your full retirement age.
The other way that you can maximize your Social Security benefit by working beyond your full retirement age is by accumulating delayed retirement credits. If you were born in 1943 or later delay retirement credits increase your benefit by 8% per year that you work past your full retirement age up to the age of 70. So if you look at these facts the best way to make the most out of Social Security is to delay retirement by a few years; if you don’t, you are “leaving money on the table” as they say.
Paul A. Kraft, Estate Planning Attorney
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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