Receiving a cost-of-living adjustment (COLA) can provide a modest boost to Social Security checks for millions of retirees, but it’s not the only way to increase your benefits. Many Americans are unaware of an alternative that could raise their monthly Social Security payments by as much as $461. It involves delaying when you start or pause receiving Social Security benefits. Let’s cut into this often-overlooked option and understand how it works.
Age
When you begin claiming Social Security plays a critical role in determining your monthly check. The concept of full retirement age (FRA) is essential. For those born between 1955 and 1960, FRA is around 66 to 67 years old. However, you’re not required to claim your Social Security at FRA. You can claim as early as 62, but this decision comes at a price—lower monthly checks.
For the first 36 months after you claim before FRA, your monthly checks are reduced by 5/9 of 1% each month. After this period, your benefits decrease by another 5/12 of 1% monthly. The result? You could see a reduction of 25% to 30% in your monthly benefits if you claim early.
On the other hand, delaying benefits until age 70 can significantly boost your checks. For each month you delay past your FRA, your checks increase by two-thirds of 1%—equating to an 8% yearly increase. The longer you wait, the more you can receive.
Stopping Benefits
If you’re already receiving Social Security checks and have second thoughts about filing early, there’s still a way to increase your future payments. While you can’t reverse your decision after one year of receiving checks, you can pause your benefits once you reach your FRA. By halting your checks, you’ll earn delayed retirement credits, which will increase your benefits when you resume them later. This method has the potential to increase your monthly benefit by up to $461.
For instance, let’s say a 67-year-old with an average monthly Social Security check of $1,919 decides to suspend their benefits. If they wait until age 70 to resume them, their checks could rise to $2,380 per month. While they will forgo around $69,000 in total benefits during the suspension period, by age 85, they will have received $428,400 compared to $414,504 if they had continued receiving checks from age 67.
Here’s a table summarizing the financial impact:
| Age | Benefit Without Suspension | Benefit With Suspension |
|---|---|---|
| 67 to 85 | $414,504 | $428,400 |
Affordability
While suspending Social Security checks can result in higher monthly payments, it’s not an option for everyone. For many seniors, Social Security makes up a large part of their income. Over one-third of Americans aged 65 and older rely on Social Security for at least half of their retirement income. This means stopping benefits, even temporarily, may not be financially feasible for them.
However, if you’re still working and receiving Social Security, suspending your checks might be easier to manage. It’s not a rigid all-or-nothing choice either. You can suspend your benefits for a few months or a year to still see an increase, although smaller, in your future monthly payments.
Right Choice
The decision to suspend Social Security benefits comes down to a few factors. First and foremost, you’ll need to assess whether you can afford to pause the payments for a while. Additionally, you should consider your health and life expectancy. If you expect to live into your 80s or beyond, delaying benefits can offer a larger payout over your lifetime.
For those in good health and with other income sources, pausing benefits could make financial sense. However, for retirees with limited savings or shorter life expectancies, claiming earlier or continuing to receive Social Security may be the better option.
It’s also essential to consult a financial advisor who can help assess your specific situation. The timing of your Social Security benefits can have a lasting impact on your financial security in retirement, so making an informed choice is key.
Boosting your Social Security checks through delayed filing isn’t for everyone, but for those who can manage it, the reward could be well worth the wait. Whether it’s the full $461 increase or just a smaller bump, every little bit can add up to a more comfortable retirement.
FAQs
How much can delaying Social Security increase my check?
Delaying benefits can increase your monthly check by up to 8% per year.
What is full retirement age (FRA)?
FRA is the age when you’re eligible for full benefits, usually 66 or 67.
Can I pause Social Security after starting?
Yes, you can pause benefits once you reach your FRA to earn delayed credits.
Does stopping Social Security checks affect lifetime benefits?
Yes, pausing checks can increase your lifetime benefits if you live long enough.
What happens if I claim Social Security early?
Claiming early reduces your monthly check by 25% to 30%.
