A Social Security bonus is not a term that is officially used by the Social Security Administration (SSA). Social Security benefits are calculated based on a person’s earnings history and the age at which they begin receiving benefits. Some credits and bonuses can increase a person’s benefits, such as the “Delayed Retirement Credit” which increases benefits for individuals who delay claiming them past their full retirement age. Most people don’t know what is the $16,728 Social Security Bonus and how a retiree can get it.
Provisions for Supplemental Security Income (SSI)
Certain provisions in American law provide extra credits, higher benefits, or special payments in certain circumstances. For example, if you are eligible for both Social Security and Supplemental Security Income (SSI) benefits, you may receive a special payment from the SSA to help you transition from SSI to Social Security.
What’s the Eligibility for Social Security Benefits?
To be eligible for Social Security benefits, you must have worked for a certain number of years and paid into the Social Security system through payroll taxes. The amount of your benefits is determined by your lifetime earnings and the age at which you begin receiving benefits. To get an estimate of your benefits, you can create a My Social Security account on the SSA website or use the Social Security Administration’s online retirement benefit calculator.
What is the $16,728 Social Security Bonus?
Many Americans may not be as prepared as they would like for retirement, but there are certain “Social Security secrets” that could potentially increase your retirement income.
For example, one strategy could potentially result in an additional $16,728 per year in benefits. By understanding how to maximize your Social Security benefits, you can potentially retire with greater confidence and peace of mind.
That’s why it is crucial to know what is the $16,728 Social Security bonus and how one can gain access to it. Read on if you want to learn more about some of the strategies that can maximize your Social Security benefits and give your post-retirement life a new twist.
How to Get a Social Security Bonus?
Social Security benefits are calculated based on a person’s earnings history and the age at which they begin receiving benefits. Some particular credits and bonuses can increase a person’s benefits, such as the “Delayed Retirement Credit” which increases benefits for individuals who delay claiming them past their full retirement age.
Social Security is an essential part of retirement planning for most Americans, providing a steady stream of income in retirement. However, many people don’t realize that there are ways to get the most out of the Social Security benefits program.
Here are a few ways to potentially increase your Social Security benefits:
1. Maximize Your Earnings
Social Security benefits are determined by your earnings history. The Social Security Administration calculates your benefits using your average indexed monthly earnings, which are based on up to 35 years of your indexed earnings. This amount is used to calculate your primary insurance amount, which determines your retirement benefits.
One simple way to increase your benefits is by increasing your lifetime earnings. The higher your earnings, the higher the starting point for indexing your earnings and it can result in a higher monthly benefit amount when you retire.
If you have gaps in your work history, increasing your annual income can be particularly beneficial. The Social Security Administration looks at 35 years of earnings, but if you have years where you did not report any earnings, the Administration will enter a “0” for those years. By raising your earnings in other years, you can bring up your overall average and increase your benefits.
2. Work Longer
The Social Security system is designed to provide income to eligible individuals in retirement. The amount of benefits you receive is based on your earnings history, specifically, your average indexed monthly earnings (AIME) which represent up to 35 years of your indexed earnings. The Social Security Administration uses this amount to calculate your primary insurance amount (PIA), which determines your retirement benefits.
When you work and pay into the Social Security system, you earn credits towards your benefits. The more credits you have, the higher your benefits will be when you retire. Each year you work, you earn a certain number of credits based on your income. Generally, you need to earn at least 40 credits to be eligible for retirement benefits, and you can earn up to four credits per year.
The longer you work and pay into the Social Security system, the more credits you will earn and the higher your benefits will be. If you can work just a few more years, you can increase your benefits significantly. This is because the more years you work and pay into the system, the more years of indexed earnings will be used to calculate your average indexed monthly earnings, which will be used to calculate your primary insurance amount (PIA) and determine your retirement benefits.
3. Delay Claiming Benefits
If you delay claiming your benefits past your full retirement age, your benefits will increase by a certain percentage each year until you reach age 70. For example, if your full retirement age is 67 and you delay claiming benefits until age 70, your benefits will be 32% higher.
You can start receiving Social Security retirement benefits at age 62, but this will result in a reduction of your benefit amount. To avoid this, you can choose to wait until your full retirement age to begin receiving benefits. The full retirement age is 66 or 67 for most people, depending on their birth year.
Another option is to delay benefits until age 70. This will result in a Social Security bonus in the form of a higher benefit amount, the bonus is around 8% more for each year you delay benefits past full retirement age.
While delaying benefits until age 70 can result in a larger check, it’s crucial to consider if this is a realistic option for you. If you plan to keep working until age 70 or beyond, you may not need to use your 401(k), IRA, or other assets for income. However, if you plan to retire at 65, you’ll have a five-year gap in which you’ll need to rely on your assets for income.
4. Coordinate with Your Spouse
If you are married, you may be able to increase your benefits by coordinating with your spouse. For example, if one spouse has a much higher earning history than the other, that person should delay claiming benefits until age 70 while the lower-earning spouse claims benefits early.
Married couples can both collect Social Security retirement benefits, but it’s essential to consider the timing of when to do so. Both spouses can start collecting benefits as early as 62, but it might be beneficial for the lower-earning spouse to wait to collect their benefit check.
If the second spouse waits until age 70 to claim benefits, it can result in a larger Social Security check. The decision on whether to do so depends on factors such as whether one or both of you are still working, your anticipated benefit amount, and how much income you have apart from Social Security.
Additionally, you’ll need to take into account life expectancies. For example, if you’re close to the same age and have similar earning records, it might make sense for both of you to wait until age 70 to claim benefits if you expect to live longer. But if you’re in poor health and anticipate living fewer years in retirement, then it might be better to take benefits earlier. Consulting a financial advisor can help you determine the strategy that makes the most sense for your situation.
5. Take into Consideration Cost of Living Adjustments (COLA)
Social Security recipients may receive an increase in benefits without taking any action on their part. Cost of living adjustments (COLA) issued by the government are intended to raise the monthly Social Security benefit amounts to help retirees keep pace with inflation. For instance, benefits went up by 5.9% for around 70 million Americans in 2022 due to a cost of living adjustment.
This Social Security increase is not a true bonus, it is the Social Security Administration’s way of helping seniors to keep up with the rising prices of goods and services. COLA increases may not always match the overall rate of inflation. However, receiving an increase can provide you with more income on which to base your retirement budget, and it can be helpful if you find yourself paying more for healthcare or medication as you age.
6. Understand the Earnings Test
The Social Security program has an earnings test that can reduce the benefits of individuals who claim benefits before reaching their full retirement age (FRA) and can continue to work. The earnings test limits the amount of money an individual can earn while receiving benefits before reaching their FRA. The limit changes each year and is adjusted for inflation.
If an individual earns more than the limit, a portion of their benefits will be withheld. For example, in 2021, for each $2 earned over the limit, which is $18,960, $1 of benefits will be withheld. This means that if an individual earns $22,960 in 2021, $4,000 of their benefits will be withheld.
However, once an individual reaches their FRA, the earnings test no longer applies and they can earn as much as they want without affecting their benefits. This is because Social Security benefits are designed to provide partial income replacement for individuals who are no longer able to work. Therefore, once an individual reaches their FRA, it is assumed that they have reached the age when they will not be working full time, so their benefits will not be reduced based on their earnings.
Even though the earnings test no longer applies after reaching FRA, Social Security benefits may be subject to income tax, depending on the individual’s total income.
7. Check Your Earnings Record
The Social Security Administration (SSA) is a government agency that manages the Social Security program. It provides benefits to eligible individuals and their dependents. The agency maintains a record of individuals’ earnings and the taxes they have paid into the Social Security system.
You must ensure that your earnings record is accurate because it determines the number of benefits you will receive. If you find any errors in your earnings record, you should contact the SSA and request a correction. This can be done by visiting an SSA office, calling the agency or online.
8. Special Circumstances
The Social Security program provides different types of benefits to eligible individuals based on their circumstances. Some people may be eligible for special payments or higher benefits based on certain situations.
For example, if an individual is determined to be disabled and unable to work, they may be eligible for disability benefits instead of retirement benefits. Disability benefits provide financial support to individuals who are unable to work due to a physical or mental condition that is expected to last for at least one year or result in death. These benefits are intended to help disabled individuals pay for their basic needs, such as food, housing, and medical care.
Additionally, those who are eligible for Social Security retirement benefits may be eligible for higher benefits if they have a low income or if they have a certain number of years of low earnings. Also, those who are widows or widowers may be eligible for higher benefits based on their deceased spouse’s earnings record.
Eligibility for different types of benefits, including the $16,728 Social Security bonus, and the benefits received can vary depending on the individual’s circumstances and the rules in effect at the time the benefit is claimed.
The Final Word
It’s important to note that these strategies may not work for everyone, and it’s best to consult with a financial advisor or the Social Security Administration before making any decisions. But by understanding how to maximize your benefits, you can ensure that you have a comfortable and secure retirement.
Social Security plays a vital role in many people’s retirement income plans. Even if retirement is far off, it’s crucial to learn how to maximize those benefits when the time comes. By implementing some of the above-mentioned straightforward strategies, you can increase your Social Security bonus when you reach retirement age.