A clever hack could increase your Social Security payment by up to 26.7%, even if you’ve already claimed benefits

You may have more control over your monthly Social Security check than you realize.

There are several factors that could change the size of your Social Security retirement benefit, even after you’ve already applied. If you continue to work before you reach full retirement age, you may see a smaller benefit. If you switch to a spousal benefit after your partner applies, you may see an increase in benefits.

Knowing all the Social Security rules can help you maximize your benefits. And a smart hack could boost your monthly check by as much as 26.7%, even if you’ve already been collecting benefits for years.

Image source: Getty Images.

The biggest factors that affect your Social Security benefit

If you want to know how to increase your benefit, you first need to understand exactly how the government calculates your monthly check. There are only three factors that come into play:

• How much you’ve earned over your career
• when you were born
• The age at which you claim benefits

When you apply for retirement benefits, the Social Security Administration (SSA) will look at your earnings for each year of your career. It adjusts these earnings for wage inflation before selecting the 35 highest-earning years of your career . Then average all those years and divide by 12 to determine your Average Indexed Monthly Earnings (AIME).

The SSA then connects your AIME to the Social Security benefit formula, which determines your Primary Insurance Amount (PIA). The formula takes into account the year you were born, which usually results in a higher PIA for younger people, all else being equal. PIA is the amount you will receive if you claim benefits in the month you reach retirement age.

The year you were born also determines your full retirement age. Those born between 1943 and 1954 reached full retirement age at 66. But the age increases by two months for each year you were born after 1954 until age 67 for those born in 1960 or later.

The last step in determining your monthly benefit is to increase or decrease your PIA based on when you claim benefits. If you claim before full retirement age, you will receive a lower benefit than PIA. If you wait past full retirement age, you will receive a higher benefit than PIA.

SSA will give deferred retirement credits to anyone who delays benefits past full retirement age. These credits are worth 2/3 of a percentage point of your PIA for each month you defer until age 70.

The table below shows exactly how your claim age affects your PIA benefit, depending on when you were born.

Data source: Social Security. Calculations by author via ssa.gov.

As you can see, delaying benefits until age 70 could increase your benefit by between 24% and 32%. But there is a way to receive delayed retirement credits even if you’ve already claimed Social Security.

The smart hack that can increase your benefits

If you applied for Social Security early but now want a chance to earn delayed retirement credits, you can ask the Social Security Administration to suspend your benefits.

You can suspend your benefits at any time after you reach full retirement age up to age 70. When you suspend benefits, you’ll temporarily stop getting your monthly check, but the government will add a deferred retirement credit (based on your previous base). benefit) for each month you wait to resume benefits. The suspension begins the month after your application is approved and automatically resumes the month you turn 70, if you haven’t already resumed them.

If someone born in 1958 chooses to suspend benefits from the month they turn 66 years and 8 months (full retirement age), they could increase their benefit by up to 26.7%. Those past full retirement age still have a chance to suspend benefits and increase their monthly checks, but they won’t be able to increase their checks as much. Those with later birthdays also won’t have as many months to accumulate delayed retirement credits, capped at 25.3% (born in 1959) or 24% (1960 or later).

Before filling out the application to suspend Social Security checks, there are some important considerations.

First, anyone collecting benefits on your file (an eligible spouse or child) will no longer be eligible for the same benefits. They will revert to their benefit if they are eligible.

In addition, if you are enrolled in Medicare, you will be responsible for your Part B premiums. The SSA usually deducts your Medicare Part B premiums from your monthly checks, but if you stop receiving a check, you will be responsible for paying these premiums out of pocket. Make sure you have room in your budget to pay those premiums without Social Security.

But if you can work around those factors and go a few years without collecting Social Security, the rewards could be worth it. Not only will you get a raise of up to 26.7%, but you’ll also benefit from the annual cost of living adjustment, or COLA. COLA applies not only to your initial benefit, but also to increased benefits from delayed pension credits, turning into a much larger benefit when you resume collecting later.