Unlocking the $21,756 Social Security Bonus

Many baby boomers can significantly enhance their Social Security checks in the coming year and beyond with a few straightforward decisions.

For most retired Americans, Social Security benefits are a crucial income source. Over the last two decades, Gallup’s annual surveys have consistently indicated that between 80% and 90% of present retirees depend on their monthly payouts to cover their living expenses.

Given the vital role of Social Security in the economic stability of aging workers, it’s crucial to optimize benefits, especially for baby boomers facing a critical decision based on their birth years (1946 to 1964). As we enter a new year, here are three intelligent options to select baby boomers to increase their Social Security benefits in 2024.

1. Exercise Patience

Opting for patience stands as the initial and uncomplicated approach for baby boomers looking to augment their Social Security benefits in 2024. The Social Security Administration (SSA) considers four factors when calculating a worker’s payout: work history, earnings history, full retirement age, and claiming age. Claiming age, the fourth factor, holds significant sway over the payout.

Although eligible workers can start taking their monthly payout at age 62, exercising patience from age 62 to 69 allows benefits to grow by up to 8% annually. Initiating claims before attaining full retirement age results in a lasting monthly reduction, whereas delaying until age 70 can increase benefits by 24% to 32% compared to what retirees would receive at their full retirement age.

2. Extend Your Working Years

A second strategic choice for baby boomers looking to increase their Social Security benefits in 2024 is to remain in the workforce for an additional year. The SSA takes into account the work and earnings history while computing benefits, concentrating on the 35 years with the highest earnings, adjusted for inflation.

Mature workers in their 60s typically earn higher average annual salaries than their younger counterparts. Extending their working years by one additional year allows baby boomers to substitute a lower-earning year from their earlier days with a higher-earning one, gradually boosting their eventual monthly benefits.

3. Leverage the SSA-521 Do-Over Clause

The third strategic method for specific baby boomers to enhance their Social Security benefits in 2024 entails leveraging the lesser-known SSA-521 do-over provision, officially titled the “Request for Withdrawal of Application.”

Many retirees initiate their Social Security payouts before reaching full retirement age, resulting in a permanent monthly reduction. SSA-521 allows individuals to undo their retired worker benefit claim, reinstating benefits with an accrual rate of up to 8% per year through age 69. This clause proves particularly advantageous for individuals who have second thoughts about their early claims, such as baby boomers who secure lucrative positions shortly after making their initial claim.

However, baby boomers should be aware of a couple of drawbacks. The request must be submitted within 12 months of benefit approval, and it is a one-time opportunity. If benefits have been received for several years, there are other options than SSA-521. Additionally, beneficiaries must repay every cent received if the SSA approves their request, including benefits received by spouses or children based on the worker’s earnings history.

In conclusion, understanding and strategically employing these options can significantly impact retirement income. Many retirees overlook potential bonuses, including the $21,756 that could be unlocked through these lesser-known approaches. For individuals lagging in retirement savings, uncovering these “Social Security secrets” has the potential to be truly transformative.