Don’t Sweat the Small Stuff

Some people must lie awake nights and worry that they might make a decision they think will cost them thousands of dollars in lost benefits.

when it comes to Social Security, most of these folks are not between a rock and a hard place. Instead, they are between a pillow and a soft place. In other words, they really can't go wrong no matter which Social Security decision they make. Drozd Irina/Shutterstock

Based on some recent emails I received, I think it’s time to bring up again a message I’ve delivered more than a few times in the past: Don’t worry. Be happy. And that message is meant for those people who are so darn intent on squeezing every last nickel they can out of their Social Security benefits.

I get the fact that people want to get all the benefits for which they are eligible. But I am talking about those folks who seem absolutely obsessed with the issue. I swear some people must lie awake nights and worry that they might make a decision they think will cost them thousands of dollars in lost benefits, but that is actually usually way less.

Because when it comes to Social Security, most of these folks are not between a rock and a hard place. Instead, they are between a pillow and a soft place. In other words, they really can’t go wrong no matter which Social Security decision they make. I’ve saved up a few emails from some of these readers, and I will share them with you today.

Q: I will turn 70 on Aug. 2, 2026. I want to make sure I get the full 32 percent bonus for delaying my retirement until that age. I’m really afraid that if I file for those benefits a little early, like in July, for example, they will start my checks in July and I will lose my bonus. Should I wait until Aug. 2 to file?

A: First things first. In your case, the delayed retirement bonus would be about 21 percent, not 32 percent. I will explain that in a minute. And it sounds like you think that the 21 percent delayed retirement bonus is an all-or-nothing deal. In other words, you assume you get an extra 21 percent added to your monthly benefits if you wait until exactly age 70 to file. But that is not how it works.

Instead, the delayed retirement credits are calculated this way. You get an extra two-thirds of 1 percent added to your Social Security benefit rate for each month you delay retirement beyond your full retirement age. In your case, your FRA was age 66 and 4 months. If I’m doing my math right, that means you reached FRA in December 2022. So, for example, had you filed for your benefits in December 2023, 12 months after your FRA, you would have received an 8 percent bonus (12 times two-thirds of 1 percent equals 8 percent).

But if you wait until age 70 to file, that is 32 months beyond your FRA, giving you a roughly 21 percent delayed retirement bonus.

So, you can file for benefits tomorrow and just tell the Social Security people you want your benefits to start in August when you are 70. And if the worst-case scenario happens and they mistakenly start your benefits right away, you would end up getting about a 20 percent bonus instead of 21 percent. In other words, you would lose that 1 percent in your ongoing benefit rate. But you would have received one extra Social Security check, probably worth several thousand dollars. As I said, you are between a pillow and a soft place, so don’t fret it.

Q: I will be 67 next year. I have worked all my life and have always paid taxes on the maximum amount of earnings that could be taxed for Social Security purposes. But my employer just downsized and I won’t make the max this year. So now I won’t get the maximum Social Security benefit. I’m just sick over this. I’ve been waiting for a long time to get this maximum benefit and now it’s gone. Can I pay the difference myself to get back to the maximum?

A: No, you can’t pay the taxes on your own. But there is absolutely nothing special about the so-called “maximum” Social Security benefit. It is not like you get some kind of bonus for reaching that milestone. Like everyone else, you simply get a retirement benefit rate that is based on your highest 35 years of inflation-indexed earnings. So if you come up a little shy of the maximum taxable earnings this year, you might make up for it by having earned the maximum in all those prior years—especially since those past years are adjusted for inflation.

But if you don’t end up with the maximum benefit, so what? What’s the big deal if, instead of getting $4,152 per month, maybe you would start getting $4,142 per month? I don’t think that’s worth losing any sleep over.

And I need to make one more important point about this whole maximum retirement benefit business. That $4,152 figure I just quoted is the maximum monthly retirement benefit for 2026.

But that does not mean it is the absolute maximum amount of monthly Social Security benefits that anyone can get from the government. Indeed, millions of retirees get much more than that. $4,152 is the maximum benefit payable to someone turning full retirement age in 2026 who has paid taxes on maximum Social Security earnings for 35 years.

But many seniors work well beyond the age of their FRA, and they get much more than $4,152 per month because of delayed retirement credits paid up until age 70 and because the extra earnings they add to their Social Security account after FRA may be used to increase their monthly retirement check.

Q: I will be 63 in October. I want my benefits to begin then. I understand I will get about 80 percent of my benefits if I do that. I don’t want to take any more reduction than that. How can I make sure my checks start in October?

A: You can do whatever you want to do, of course. After all, they are your Social Security benefits. So when you fill out your retirement application, just make sure you indicate October 2026 as the month you want your Social Security checks to start.

But frankly, I am a little confused why you are so worried that your benefits start exactly at age 63. Your monthly benefit rate is reduced by about one-half of 1 percent for each month they are taken before your FRA.

You were right that if you take your benefits at 63, you would get about 80 percent. But if, for example, they were to start a couple of months earlier, you‘d get maybe 78 or 79 percent. In other words, you’d lose a few bucks per month, but you'd gain one or two extra Social Security checks.

Once again, it’s a pillow or a soft place.