With the announcement that senior citizens will face yet another Social Security freeze, many are bracing for a paycheck that doesn’t meet the rising cost of living, according to an Associated Press report.
The government is expected to announce this week that more than 58 million Social Security recipients will go through a second straight year without an increase in monthly benefits. This year was the first without an increase since automatic adjustments for inflation started in 1975.
It’s a frightening thought for many seniors who do not have a pension to rely on. Here are some tips to maximize your Social Security benefits:
1. Retire, then retire again
A retiree collecting Social Security may find another well-paying job. In this scenario, the individual can withdraw benefits application and repay in one lump sum what they’d received. Later, they would reapply for what would be a larger Social Security benefit, as much as 30 percent higher. Additionally, the money that was received prior to gaining a new job can be put into an account to gain interest.
2. File and suspend
File for your retirement benefits so that your children or spouse can collect an amount based on your earnings record. Then, Sims said, suspend your benefits until age 70. According to Kiplinger, your benefits will increase an additional 8 percent for each year you delay collecting beyond your normal retirement age, up until age 70.
It’s not the answer many want to hear, but waiting longer to retire is key, Sims said. “Even if you find a job paying 1 million dollars a year, there is no reduction in benefit if you work until full-retirement age.”
For more on making Social Security work for you, read this Q&A by James Daniel, an Atlanta-based certified financial planner.