Top 10 Ways to Maximize Your Social Security Benefits

Retirement Benefits
Consider these statistics on the importance of social security benefits:

  • Social security is the largest source of income for 61 percent of elderly beneficiaries.
  • Without social security in retirement, 40 percent of beneficiaries would have incomes below the poverty line.
  • 97 percent of people aged 60 to 89 receive social security or will receive it.

Plan Your Retirement

Clearly, social security is crucial to the financial health of so many Americans. With concerns that social security faces insolvency, many people in the United States are rightly concerned that benefits will be cut.

You should be prepared, regardless of what happens in the coming years, and you can start by learning how to maximize your benefits. There’s more to social security than just paying into it during your work years and collecting in retirement. Here are 10 ways you can do just that.

1. Wait until you’re 70

Personal issues, like a health concern, may make you take social security sooner, but if you can you should wait until you’re 70. Social security benefits at 70 years old are 76 percent higher than if taken out at age 62.

This increase is thanks to delayed retirement credits (which are equal to 8 percent per year plus inflation). These credits start accumulating for every year past retirement that you delay taking social security (they stop accumulating at age 70).

2. Work for 35 years

Although this duration may not be possible because everyone’s situation is different, working a full 35 years will help increase your payout. Your highest 35 earning years while working are factored in when calculating your social security benefits.

For instance, six years will have zero income if you only work for 29 years, which will decrease your payout.

3. Make more money

Understand this: social security benefits are based off your lifetime earnings. The more you make (and the more you pay into the program), the more you’ll get.

Increasing your income is easier said than done, right? If you have extra time, you could start a side business or work a part-time job. If you don’t, ask your boss for a raise when the time is right, or try to find passive income streams.

4. Claim a spousal benefit

If you’re married or divorced, you could be eligible for more than one benefit. Here’s how it works:

  • Married: You or your spouse can claim a spousal benefit, which is equal to about 50 percent of the other’s full social security benefits.
  • Divorced: As long as you were married for at least 10 years, you and your ex-partner can claim each other and get a spousal benefit based on the amount the other is receiving.

Note: This strategy does not work if you file early for social security. You must be at full retirement age to be eligible for both benefits. Also, spousal benefits can only be claimed if the spouse has filed to claim his or her benefit.

5. Claim a survivor’s benefit

If you are a widow, you can get a survivor’s benefit. This benefit is equal to about 100 percent of the deceased’s full benefits — more than the traditional spousal benefit.

When you claim the survivor’s benefit, try to wait longer because the amount will be higher (see tip #1).

Social Security Retirement

6. Claim twice, but claim only one benefit at a time

If you are eligible for a spousal benefit, make sure you don’t claim both at once because you’ll only receive the higher of the two amounts. For most people, the best option is to first file a claim for the lower of the two benefits. You can then let the other benefit grow thanks to delayed retirement credits.

Note: Spousal benefits max out at full retirement age, while your own max out at 70 years old. If your spouse’s full retirement age is 66 and you’re set to receive more from that benefit, claim your own benefits from 62 to 66 years old, and then start receiving your spousal benefit at age 66.

7. Don’t earn too much in retirement

Working and earning over a certain amount in retirement will decrease your benefits. To maximize benefits and earnings, try to get your work salary right below the earnings limit.

In 2016, the annual work earnings limit is $15,720 if you haven’t reached full retirement age. For every $2 you earn over that amount, you lose $1 in social security benefits. At full retirement age, the annual limit is set to $41,880. For every $3 you earn over that amount, you lose $1 in benefits.

8. Reduce social security taxes

If what you earn from adjusted gross income and nontaxable interest, along with 50 percent of your social security benefits, adds up to over $34,000 (or $44,000 for married couples), take note that up to 85 of your social security benefits can be taxed.

Try to keep the amount just below the threshold, which will lower the amount of taxed social security benefits to no more than 50 percent.

9. Check annually with the Social Security Administration

Many people just assume their social security taxes are being recorded correctly. Unfortunately, mistakes can be made by you or the administration.

After filing tax returns each year, contact the Social Security Administration, and make sure you’re getting credit for what you’re paying.

10. Talk with a professional

Every personal situation differs, which can create difficulties with maximizing your social security benefits. If you are unsure of anything, do your research and talk with the experts.

After all, your money is on the line, and you deserve to get the most you can.



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