Social Security’s 2017 Nuances

(2 Minute Read)

From year to year, inflation impacts the exact dollar amount of Social Security benefit per month for those newly entering retirement. In 2017, that amount will be $2,687, 0.3% higher than last year. Those who are already in retirement might see a different number though, one that depends on many factors.

How Benefits Are Calculated

Once you qualify for Social Security, usually after around 10 years of full-time employment, your monthly benefit is calculated by taking an average of your highest-earning years in today’s dollars. For example, if your highest earning years were 1980-1995, the sum of your income would be adjusted for today’s inflation before it was all added together. Once your highest 35 years of income have been added up, that number is divided by 420 (the number of months in 35 years) to figure out how much income you averaged a month during those years. That income level will determine the max amount you can qualify to receive each month. That’s why even though you might have enough credits to barely qualify for Social Security after ten years, most people wait until 65 or older so they can draw full benefits.

How to Get Larger Benefits

Working longer is one way to earn a larger Social Security check: earning more is another. As higher earning years replace your lower earning ones, the maximum amount of monthly benefits you can qualify for will also increase. Even if your income doesn’t change, you also receive additional benefits for every year you wait to retire between age 66 and 70. These credits for delayed retirement can lead to as much as a 130% increase in your eventual monthly benefit after age 70. In 2017, if you’re retiring at age 70 your max monthly benefit is $3,538, not the $2,687 set for those just reaching retirement age.

Maximize Assets Outside Social Security

When it comes to Social Security, there are a few ways to maximize benefits, but ultimately they’re determined by your long history of income, and only intended to replace about 40% of your full-time income. The other 60% of that money you’re used to having can come from investment income, savings, a part time job, or liquidation of assets like a home that is larger than necessary, too many cars, or too many life insurance policies. Selling an insurance policy in a life settlement can allow you to get back some of the investment you’ve made in the policy’s premium while also freeing yourself of the premium payments.

Learn more about life settlements and how they can provide a very real benefit by visiting our website today!

Case Study: Max retired several years ago when he thought he was financially set. With the last market crash he saw a big portion of his retirement funds disappear. Max owned a $500k life insurance policy he kept from his last job to provide for his wife but she passed away last year. Max found out he could sell his policy and received a check for $75k that he used to bridge the retirement gap.

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