social securityThis year, Social Security checks are 1.7 percent bigger than last year.  If you keep on working while you receive Social Security benefits, you can earn $480 more than last year before part of your Social Security payment is withheld.  And, the maximum possible benefit is up – a little.  The more you understand about how Social Security works, the more options you have.  Here are some tips to help you tweak your benefits.

Are you working and receiving Social Security?

After you reach the full retirement age, there’s no penalty regardless of how much you earn while you receive Social Security.  While you’re younger than 66 (the full retirement age if you were born between 1943 and 1954), you can earn up to $15,120 and none of your Social Security will be withheld.

If you earn more, $1 of every $2 will be temporarily withheld. Once you reach the age of full retirement, your Social Security will begin to reflect the benefits that have been withheld along with your continued earnings.
What if you’re turning 66 this year?  In that case, you can earn up to $40,080.  For earnings above that, $1 of every $3 you earn will be withheld.

Do you and your spouse both work?

After you reach full retirement age, you may be allowed to claim spousal benefits now and change later to receiving payments based on your own work.  By not claiming until you’re older, you can get higher benefits.
A spouse may claim benefits for her or his own work, or may claim as much as 50 percent of the spouse’s higher benefit, whichever is greater.  You can also claim based on your former spouse’s work even though you’re divorced as long as you were married for at least 10 years.

How does the 2013 cost-of-living increase compare?

There was no adjustment for inflation in 2010 and 2011.  It was zero.  In 2012, there was an increase of 3.6 percent, which makes the 2013 1.7 percent increase look a little pale.  At least, it’s an increase.

It raises the average payment by $21 from $1,240 before the adjustment to $1,261 now.  For couples, the average payment is up from $2,014 to $2,048.  The maximum benefit if you start taking Social Security at full retirement age would be $2,533 per month this year.  That was $2,513 a month last year.

Oh, and payments now only come via direct deposit or on a Direct Express Debit MasterCard.  They stopped mailing paper checks March 1.

Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.