Millions of seniors today collect monthly benefits from Social Security. And the reality is that the more generous those payments are, the more financial freedom you can enjoy as a retiree.
Now some of the tactics you might use to boost your Social Security checks may be pretty obvious. For example, a lot of people know that delaying your filing past full retirement age will result in larger benefits. But here are some lesser-known ways for getting more money out of Social Security.
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1. Extend your career if you're earning the highest paycheck you've ever collected
You may find that by the time you're ready to retire, your annual salary is the largest it's ever been in the course of your career. At that point, if you postpone retirement a bit so you can collect that large paycheck for another year or two, your Social Security benefits might enjoy a really nice lift.
See, your monthly benefits are calculated based on the amount of money you earn during your 35 highest-paid years in the workforce. So let's say you reach your mid-60s and are earning $150,000 a year, which is your highest salary on record. If you keep working and earn that $150,000 for one more year, you might replace, say, a $40,000 salary from earlier on in your career in your Social Security benefits calculation, resulting in higher monthly payments in retirement.
2. Undo an early claim and file again for a larger benefit
You're allowed to file for Social Security as early as age 62, but you can't get your complete monthly benefit based on your personal wage history until full retirement age arrives. Now usually, when you claim Social Security early, you're stuck with that lower monthly benefit for life -- that is, unless you know about the do-over option.
Social Security gives all filers a single do-over in their lifetime. So if you've claimed Social Security early and regret your decision, act quickly.
Withdraw your application for benefits within a year of filing it, and repay the Social Security Administration all of the benefits you received. If you do both of those things, you'll have an opportunity to claim Social Security at a later age and potentially lock in a much higher benefit than the one your early filing would've left you stuck with.
3. Claim benefits on your spouse's record instead of your own
It may be that you worked your entire life and are eligible for Social Security benefits accordingly. But if your spouse was a notably high earner, you may fare better collecting spousal benefits than your own Social Security benefits.
If you file for spousal benefits at full retirement age, you'll get 50% of the amount your spouse is entitled to. So let's say you're eligible for $1,500 a month from Social Security, but your spouse is eligible for $3,300. That means you're entitled to a $1,650 monthly spousal benefit, which is more money than the benefit you're eligible for on your own.
Now to be clear, you can't double dip on Social Security benefits. In other words, you're only allowed the higher of your own benefit or the spousal benefit you're entitled to -- not both at the same time. But clearly, taking the higher sum is a no-brainer.
The more you know about Social Security, the better positioned you'll be to score a higher monthly payday. Take the time to read up on the program so that you can develop a strategy that leaves you with more income in retirement.
