Social Security plays a key role for tens of millions of Americans, with most retirees relying to a large extent on the program for the money they need to cover basic living expenses. If you want to make the most of Social Security, it’s essential to start planning well before you retire, because that’s when you’ll find it easiest to take steps that will lead to a true difference in the amount of your monthly benefit checks. Below, you’ll find three things to consider that can increase the amount of benefits you get from Social Security.
1. Maximize your earnings history
The Social Security Administration looks at the 35 top-earning years of your career in coming up with its calculation of how much you’ll receive in benefits. Those amounts are adjusted for inflation, so the differences between what you earned early in your career and what you earned most recently won’t be quite as wide as they’d otherwise be.
The way the SSA calculates benefits makes two things clear. First, if you don’t work for at least 35 years, then you’re putting yourself at a disadvantage, because the SSA will simply factor in zeros for the years that you didn’t work. That will reduce your average earnings and therefore cut what you’d get from Social Security, so extending your career to 35 years is a good place to start. Also, even if you’ve already worked 35 years, you can still do better if your current pay is higher than your lowest-earning year after adjusting for inflation.
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2. Claim at the right time
When you claim will make a big difference in how much you get every month. Wait until age 70 to claim retirement benefits, and your monthly checks will be as much as 75% higher than they’d be if you claim at age 62. The obvious trade-off: eight years of getting absolutely nothing from Social Security in exchange for that higher monthly payment at the end.
Deciding when to claim depends on a number of personal factors that are tough to generalize. Some people like to maximize total lifetime benefits. Others have ideas about when they prefer to have the money, with some wanting more money early in retirement while some are most concerned about having maximum income toward the end of their lives. If you have the financial flexibility to be able to make a true decision about when to take your Social Security rather than be forced to claim by financial circumstances beyond your control, then timing your decision to fit best with your own particular needs will ensure you can get a benefit boost at the time you most want it.
3. Be smart about family benefits
If you only consider Social Security’s retirement benefits, you could miss out on a huge potential source of income. Coordinating spousal and survivor benefits under Social Security adds complexity to the program, but there are situations in which these additional benefits can actually be more important than your retirement benefits. In particular, if you earned relatively little during your career but your spouse had substantially higher earnings, then you’ll want to look closely at what impact spousal and survivor benefits could have both right now and in the future.
In some cases, what you should do is different depending on whether you take family benefits into account. For instance, many advisors suggest not taking benefits as early as possible, even though most people prefer to do so. However, if you have both retirement benefits under your own work record and survivor benefits based on a deceased spouse’s earnings history, it’s often smartest to claim your own retirement benefits as early as possible while waiting until later to claim survivor benefits. That way, you can get the best of both worlds: money now and more money later.
Make the most of Social Security
Millions rely on Social Security, and you deserve to get the most you can from the program. By considering these three things, you’ll improve your chances of boosting your Social Security when you need it most.
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