Many people spend the last 20 years or so before they retire carefully planning what they will need to do to stop working when they are ready. And while so often this involves making good financial choices early on in your career, there are a few things that you can do later in life that can make an impact.
And we're not talking about a small impact, either. According to the experts, making a few tweaks before you retire can help you earn as much as 30 percent more when it comes time to collect Social Security. Want to see how you can help increase your monthly payment? Keep reading to see what the experts say you will need to do right now to make a difference.
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Want to make more money after you retire? According to Evan H. Farr, Certified Elder Law Attorney and Retirement Planner with Farr Law Firm, P.C., you'll need to wait a bit before you start claiming your payments.
"Since Social Security is actuarially based, and there is an incentive to wait until as late as possible, you have a lot of power to time your claims," he says. "If you claim after full retirement age, but before 70, each year that you delay your claim will give you an additional 8 percent."
Related: You Could Take a 50% Social Security Benefit Hit if You Make This Decision
Farr says that's an overall increase of around 24 percent over two years. "Combine that with the fact that you'll typically be adding higher-earning years to the mix, and you could get close to that 30 percent number."
Of course, delaying when you collect Social Security isn't the same as delaying retirement, according to Farr. "If you have a well-funded nest egg, or access to other sources of income, you can transition out of your main job, and still delay receiving Social Security," he says, adding that this may mean funding your own retirement for those first few years. "What you gain is a bigger, inflation-indexed lifetime benefit."
Only Retire After 35 Years of Work
Because benefits are based on your highest 35 years of earnings, you'll want to go out on a high note when you finally retire, and ensure that you have enough working years under your belt to boost your yearly average.
"Social Security calculates your benefit off your highest 35 earning years," Christopher Walsh, Senior Financial Advisor and Regional Marketing Director at Capital Choice Financial Group, says. "If you only worked 30 years, you've got five zeros sitting in that calculation dragging your average down."
Putting another five years in on your job can help increase the amount of money you get paid, sometimes by as much as 30 percent.
Related: 3 Worst States To Retire In If You Plan On Living On Social Security Alone
Talk to a Professional About Your Retirement
According to Walsh, bringing in the big guns (as in, the pros) is another way to increase your benefits. "People ask me all the time if they really need help with this and my answer is yes," he says, adding that there are about 9,000 different combinations that couples can use when claiming their benefits.
"You get one shot at that election. Married couples especially have strategies most people never think about, like having the lower-earning spouse claim early while the higher earner keeps accumulating so the surviving spouse gets a bigger benefit down the road," he continues. "That kind of planning gets missed constantly."
While it's obvious that there are a few different things you can do to make the most of your earnings once you start collecting Social Security, it sounds like these three things are really the most impactful when planning for retirement.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
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