You deserve Social Security benefits. You pay taxes to earn these benefits over the course of your career, and the program is designed to help seniors afford their later years.
Although most workers become eligible for some Social Security income, decisions you make can impact just how much money you get. Here are three strategies you can implement to maximize your benefits and make the most of this entitlement program.
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1. Increase your income
The Social Security benefits formula is designed to ensure you replace around 40% of pre-retirement income. It takes into account your earnings and sets your benefit amount based on the average income you brought in during the 35 years your earnings were the highest.
If you want more money from Social Security, the simplest way to get it is to earn more. You'll pay higher Social Security taxes when you increase your earnings, and will end up with a higher average wage, which is used to determine the size of your monthly checks.
2. Claim spousal or survivor benefits if you can
You may actually end up getting more Social Security benefits if you don't claim them based on your earnings history, but instead get benefits based on a spouse's earning records instead.
This could be true if you have a current spouse who earns more than you, or if you're divorced from a high-earning spouse after a decade or more of marriage. Survivor benefits can be available earlier than retirement benefits, while both your survivor and spousal benefits could be higher than your own retirement checks if your spouse earned a lot more than you.
You should make sure to understand how much money you'd get by claiming these benefits instead of your own. Don't assume the Social Security Administration will always optimize your claiming strategy for you, as that's not necessarily the case. It's up to you to determine if you qualify for different benefit types and to file for them if doing so would give you more cash.
3. Calculate your break-even point
There's a wide range of times when you could get your first Social Security check. Retirement benefits can first be claimed at age 62, or you can wait for many years to start them. For every month you wait to claim benefits beyond the earliest age of eligibility, your monthly Social Security check will go up.
Because of this, some people want to claim Social Security at 70 because doing so allows you to increase your monthly payment as much as possible (delaying beyond 70 doesn't result in further benefit bumps). This makes sense for some people, but only those who live for many years after finally claiming benefits.
If you don't live long enough to get enough checks for your higher benefit to make up for payments you missed in the months before claiming, you will end up with less lifetime Social Security income. So calculate how long you'd have to live before you decide to delay. If you anticipate it would take you more than a decade for the higher payments to make up for forgone checks, think seriously about whether you're likely to live that long.
Taking these three steps can help you get more of the Social Security benefits you deserve. You work hard to earn money that you pay into Social Security. You owe it to yourself to know how the benefits program works and how to get the biggest pot of cash from it as a retiree.
