4 Steps You Can Take In 2022 To Increase Your Future Social Security Checks
A A higher Social Security check can give you more financial security in retirement because these checks are guaranteed for life. They will also be an important source of income, although they cannot be your only source of funds.
But how can you increase the amount of money you get from your retirement benefits?
If you are working now, there are actually steps you can take in 2022 that could lead to a larger Social Security payment later in life. Here are four.
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1. Invest in a Roth account
Investing in a Roth 401 (k) or Roth IRA instead of a traditional 401 (k) or IRA can make a huge difference in your future Social Security benefits. This is because it can help you avoid the retirement income tax, which an increasing number of seniors are subject to each year.
Social Security benefits are not taxed by the federal government until your interim income reaches $ 25,000 as a single filer or $ 32,000 as a married filer. Once this threshold is reached, up to 50% of benefits are taxed. And if your income exceeds $ 34,000 as a single filer or $ 44,000 as a married spouse filer, up to 85% of the benefits will be taxed. Provisional income is half of your social security, some non-taxable income, and all taxable income.
Since Roth distributions are not taxed, investing in a Roth means that you likely won’t lose any part of Social Security to the federal government if you’ve made these accounts the centerpiece of your savings plan – retirement. As a result, you will have a lot more money to spend on Social Security.
2. Negotiate your salary
Social Security benefits are based on the average income over your career. So if you increase your average income, your benefits will increase. Unfortunately, many people miss the best chance at doing this because they don’t fight back when they get a new job or during annual performance reviews.
Studies have suggested that not negotiating your salary could cost you up to $ 600,000 in lost income over your career. Unfortunately, this will not only affect your current standard of living; this will also leave you with a greatly reduced Social Security check.
The more years of lower income you receive because you didn’t claim what you wanted, the greater the impact on your Social Security benefits. So, make 2022 the year you start defending yourself at work.
3. Look for a better paying job
A big resignation is occurring, with millions of people leaving their jobs in search of better opportunities.
If you want to increase your Social Security benefits, you may consider joining them in 2022. If you explore new opportunities, you may be able to increase your income and thus increase the income used to determine the average salary your Social Security receives. . are based on.
4. Consider a side concert
Any income on which you pay Social Security taxes counts towards the average salary that sets your benefits. You therefore also have the possibility of increasing your income by taking a second job. Even working a few extra hours a month could give you an annual pay rise that will make a noticeable difference in your future benefits.
Ultimately, the more you can increase your income in 2022 – up to the maximum taxable amount – the more you can increase your future benefits. If you increase your income and lower your future taxes by investing in Roth instead of traditional accounts with taxable withdrawals, your future Social Security checks will be much larger.
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