Will your Social Security checks get a boost once you reach full retirement age?

Although Social Security is an integral part of most Americans’ retirement planning, many individuals are still unclear about how it works. One potentially harmful assumption is that your Social Security payouts will increase after you reach full retirement age (FRA).

That may occur for some seniors, but it’s not something every senior should expect. Here’s a deeper look at who could see their check increase over time and why.

What’s your FRA?

Before we get started, you should understand the full retirement age (FRA) and how it impacts your checks. The government assigns an FRA to everyone, depending on their birth year.

If you want the full Social Security payment based on your employment history, you must wait until this age to sign up. You can begin sooner, but you claim benefits below your FRA reduces your checks each month. Those who start at 62 receive just 70% of their maximum benefit per check if their FRA is 67 or 75% if their FRA is 66.

Every month you postpone benefits will boost your checks from 5/12 to 2/3 of 1% until you reach your maximum benefit of 70. If your FRA is 67, this equates to 124% of your full benefit every check, or 132% if your FRA is 66.

Who receives a boost when they reach FRA?

Technically, everyone’s checks will most likely increase throughout the year they achieve their FRA. Because of cost-of-living adjustments (COLAs), benefits will be increased every other year. COLAs are yearly adjustments made by the Social Security Administration to ensure that Social Security’s purchasing power keeps up with inflation. However, while you are theoretically receiving more money, it’s unlikely that it’ll go any further than your previous smaller checks.

Some people notice significant increases in their benefit checks after they reach their FRA because money was previously withheld owing to the Social Security earnings test. That only applies to people who claim Social Security while working and are still below their FRA.

Due to the earnings test, those below their FRA for the entire year 2022 lose $1 from their Social Security payments for every $2 they earn beyond $19,560. Those who turn FRA this year will forfeit $1 for every $3 earned beyond $51,960 if they reach that amount before their birthday. However, the Social Security Administration won’t keep this money indefinitely.

Once you reach your FRA, the government recalculates your benefit and increases your checks somewhat to compensate for the money it previously withheld from you. Several circumstances determine how much extra you’ll receive, including how much you withheld in previous years.

However, if the Social Security Administration has never denied you benefits, you shouldn’t expect a raise at your FRA. You’ll keep receiving the same-sized checks as previously, with minor yearly COLAs.

How can you maximize your Social Security benefits?

You must carefully determine your beginning age to get the most money from Social Security. For individuals with short life expectancies, claiming early generally leads to the highest lifetime benefit. If these people wait too long, they may lose their benefits entirely.

Those who expect to live into their 80s or beyond might consider deferring benefits if they can afford it. It means they’ll receive fewer years of payments, but over time, the greater benefit amount might add up to a larger lifetime total.

If you can’t afford or don’t want to postpone benefits, that’s okay. Remember that you’re unlikely to receive any further funds at your FRA. So be sure you have sufficient personal savings to address any gaps left by Social Security.

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After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely withhelping them pursue the most comfortable financial life possible.Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.Aaron can help you and your family to create, preserve and protect your legacy.That’s making a difference.

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