Within the United States pension system, the Social Security Administration sends a check to its pensioners every month. This check depends on a number of factors that determine the final amount that a person collecting Social Security will receive each month. If we plan well all the details related to the retirement benefit, we will have a much better check in the end.
It is important to keep in mind that in order to plan for a maximized Social Security checkwe must do so well in advance. We can’t think about having a big check just a year before we apply for Social Security. Many U.S. citizens don’t understand this and think that it doesn’t matter what we do before we apply. However, our work history plays a critical role in the final size of the pension check.
The number of factors that have a direct bearing on benefits are three. Of those three factors, two of them are work-related. The third of these factors is directly related to the retirement age, which makes a big difference to the benefits. That is why it is necessary to plan very well for these three elements when applying for our retirement money.
How to plan well the retirement check?
The first thing to keep in mind when planning our retirement cheque is the age at which we want to apply for Social Security. If we are thinking of applying for Early Retirement Age, we should maximize the other two elements. On the contrary, if we want to wait until Full Retirement Age, at age 67, we will have more time to increase the monthly amount.
With Early Retirement Age, at age 62, our Social Security check will have a 30% reduction of the money contributed. This is not the case with Full Retirement Age, since with this other option we get 100% of the money we are entitled to.
Since we have 30% less, the goal to get a good benefit with the Early Retirement Age is to work at least 35 years with a good salary. The more years worked, the better the average check. Also, the higher our salary, the more taxes we pay. And the final cheque depends on the taxes we have paid during our working years.
So to plan for a good retirement, we should keep in mind that:
Our check depends on our retirement age.
The salary as a worker greatly influences the final amount.
The years worked should be the maximum.
If we take these three elements into account, we will be able to get a good Social Security check in the future, something that is necessary in these difficult times with so much inflation in prices.