The one essential rule of thumb to abide by when attempting to maximize on your Social Security benefits is to delay tapping into them until age 70, if you can. This is because at age 70, you can receive the highest possible monthly payout, as opposed to age 62, when you’re technically eligible for benefits but will be withdrawing a reduced amount.
Waiting a few years to collect can make a larger difference to your retirement funds than you may realize. For example, someone born in 1935 who began collecting at age 62 would get 80 percent of their monthly benefit. However, if they began collecting at age 70, they would get 132 percent of their monthly benefit. To get an estimate for what your benefits might look like, you can use this calculator on the Social Security website.
If you have a spouse, managing your household benefits should be simple. Plan to collect the lower-earning spouse’s benefits early, and wait until age 70 to begin taking benefits from the higher-earning spouse. This is a common strategy to get the most payout and will ensure that the spouse who is second to die will get the highest monthly payout they can.
If you feel you’re ready for retirement in the near future, or may simply be wondering how doable living on your retirement budget will be, do a six-month trial run of your budget. Figure out living costs such as your mortgage, bills, food expenses, vacations, hobbies and so forth. If you have income from a part-time job or other source, you should also calculate this.
By doing this, you’ll be able to gauge how realistic your retirement plans are, and whether you need to save up more money. One factor that you may not have considered is the inflation, which could go up to 5 percent in the next few years, so you’ll want to pad your savings appropriately.