Imagine Social Security as that loyal friend who never lets you down: it’s one of the few sources of income that doesn’t run out, no matter how long you live. Unlike IRA or 401(k) accounts, which can be depleted if the markets perform poorly or if retirement lasts too long, the checks from the Social Security Administration (SSA) are guaranteed.
The key to a comfortable retirement is not settling for the basics. You can increase your monthly payment by earning more while you are working, improving your average, being patient and waiting until age 70 to earn an extra 8% per year, or even using the “undo button” if you regret claiming the money too soon. In the end, these adjustments can mean tens of thousands of extra dollars over time in your pocket.
Planning the retirement
Saving to have a dignified retirement is one of the main goals for any worker. Everyone’s biggest fear is running out of money in their bank account while they’re still around, active and going strong. Accounts like IRAs and 401(k)s are great and useful tools, but they are market-based and depend on external factors that can’t be controlled.
On the other hand, the Social Security system works in a completely different way: its monthly checks keep coming for life. That guarantee is the “financial backbone” that supports millions of retirees. That’s why trying to maximize that payment is not just a responsible action, but it’s also common sense. The decisions you make today are the ones that will make your retirement feel stable, especially when medical expenses start to rise and inflation tries to eat into your fixed savings.
Benefits history
The amount you receive from Social Security depends on your work history, especially during the 35 years of highest earnings, which will determine the amount you will receive. This means that any extra money you earn today—whether from a promotion, a freelance job, or consulting work—will be added to your monthly figure. By earning more and paying the corresponding taxes, you are “erasing” the years when you earned less, since they will not be considered. Raising this average is the most direct way to ensure that your monthly check is larger. Additionally, it has a positive ripple effect: by earning more today, you can increase your other retirement accounts, strengthening your financial situation.
The 8% Bonus
Social Security retirement checks can be applied for starting at age 62, but this has its consequences, resulting in a smaller amount in your checks. On the other hand, if you wait until your full retirement age, you receive what you are entitled to. But if you hold off a bit longer, ‘delayed retirement credits’ come into play. This consists of an 8% increase for each year you delay after your full retirement age up to age 70. It is a permanent increase that can make a difference in your retirement.
How to reset your retirement request
It is not uncommon for a beneficiary to change their mind once they have applied for retirement, either because the amount of the check is not enough or because they want to become professionally active again. If this happens, there is an opportunity for a “one-time do-over,” that is, a little-known but very useful escape clause. If they want to reverse the application, the beneficiary must act within 12 months of the original application and will have to fully return the money received from Social Security. It is then that the system “resets” the application, postponing it for later.
Frequently asked questions
What is the main difference between Social Security and 401(k)?
Unlike a 401(k) or IRA, which can run out, Social Security is a guaranteed lifetime income that does not depend on market volatility.
How much extra do I earn if I wait to retire?
For each year you delay your claim past full retirement age (up to age 70), your benefit increases by a permanent 8%.
Can I cancel my retirement if I’ve already started collecting?
Yes, you have a 12-month period from your original application to change your mind, repay the money received, and “reset” your benefit for the future.