Trying to max out your Social Security retirement benefits?
You can crunch the numbers a few ways: online or in person through the Social Security Administration, or by using a financial planner.
Online, create your own "my Social Security" online account via this link to the Social Security website, www.ssa.gov/myaccount.
The Retirement Estimator allows "what if" scenarios - say, if there is a change in how much you earn, or if you choose to retire at any one of a number of ages (63, 64, 68, and so on). Find the estimator at www.ssa.gov/retire/estimator.html.
You can also stop in to your local Social Security office to learn about your benefits. To find an office near you, call 1-800-772-1213 (TTY 1-800-325-0778) or visit www.ssa.gov/locator.
Martin Abo, a certified public accountant with offices in Mount Laurel and Morrisville, says your earning record is the key to your retirement benefits.
Typically, benefits are calculated using what's known as the Primary Insurance Amount. Since it's complicated, Abo says, "the most practical way to estimate the PIA is to have it done by the Social Security Administration."
But mistakes happen - say, Social Security fails to base its calculation on your correct earnings record.
"You want to confirm your earnings to make sure it's absolutely right," he says. Social Security will send you a "Personal Earnings and Benefit Estimate Statement" for each year for which it has a record for you.
Your best years
Determine the 35 years in which your earnings were the highest.
Here's one example from Abo: Mr. Tax E. Vader was born in 1951. He started working in 1970 and is retiring in 2015.
Social Security says it determines his PIA by indexing his earnings for each year from 1970 to 2011, the year he turned age 60, using a formula that aims to ensure that his future benefits "reflect the general rise in the standard of living that occurred during [his] working lifetime."
For the years after he turned 60 (2012-14, in this example), his actual earnings would be used.
The 35 years representing the highest earnings are incorporated into the calculations. Other years' earnings are disregarded.
Consult a pro
There's an entire cottage industry of financial planners and books available to help game Social Security for the greatest amount.
One new tome is Getting Paid to Wait by Brian Doherty (Acanthus Publishing). He advocates waiting as long as possible to claim benefits - particularly for women, who tend to outlive men.
Timing is everything. Knowing when and how to claim Social Security benefits can boost retirement income by many thousands of dollars. For married couples, the right Social Security claiming strategy can mean $100,000 or more over their joint lifetimes.
Spousal benefits equal 50 percent of a worker's benefit if collected at age 66, less if claimed earlier.
Survivor benefits equal 100 percent of the worker's benefit if collected at 66, less if claimed earlier.
Abo says 66 is the "magic age."
If you wait until 66, you can collect your full retirement benefit, exercise some creative claiming strategies, and avoid losing benefits due to earnings restrictions.
The Earnings Cap
If you collect Social Security benefits before age 66 and continue to work, you lose $1 in benefits for every $2 earned over the limit. If you keep working, in most cases it makes no sense to claim reduced retirement benefits early at age 62.
There are exceptions, however. You can collect Social Security benefits early if you really need the money and are no longer working or earn less than the earnings cap, or if you're in poor health and may not live until your normal life expectancy.
There are more options, and sometimes it makes more sense for one spouse to collect benefits early, Abo advises.
If one spouse has little or no work history, the main breadwinner can "file and suspend" at 66, triggering spousal benefits while deferring retirement benefits until later.
In a two-income situation, if one spouse files for benefits early, the other can wait until age 66 to file a restricted claim for spousal benefits only. He or she collects a smaller benefit now - and a bigger benefit later.
Power couples, in which each has earned substantial retirement benefits, can do both: One can file and suspend, triggering benefits for the other; the other spouse files a restricted claim for spousal benefits only. Or, they both defer claiming their own benefits until they are worth the maximum amount.
Bonuses, of sorts
You earn 8 percent for every year you delay claiming Social Security retirement benefits beyond your normal retirement age, up to age 70.
And you can collect on your ex. As long as you were married at least 10 years and are not currently married, you may be able to collect on your ex-spouse's work history as early as age 62.