5 Social Security Secrets for Even Bigger Checks

You probably already know the basics of maximizing your Social Security benefits: earn as much as you can in your working career and delay taking benefits as long as possible. But there are a lot of other things you can do to make sure you get the biggest checks possible from the government. Here are five to consider.

1. Maximize your spousal benefit

When applying for Social Security benefits, you can take the spousal benefit, which is equal to 50% of your spouse’s or ex-spouse’s benefit. The spousal benefit maxes out at your own full retirement age; it doesn’t keep growing for delaying retirement.

A pile of social security cards.

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The catch: Your spouse has to have filed for their own benefits already. (This rule doesn’t apply to ex-spouses.) Remember, the goal isn’t to maximize an individual’s benefits, but to maximize the couple’s, so it might make sense to apply for benefits earlier. Each situation is unique, but it pays to do the math.

Another option is to start by taking your own benefit, and then expect to switch automatically to your spousal benefits later after they’ve applied. In that case, it’s your best option to start taking benefits by full retirement age, since you’ll mostly be collecting spousal benefits for the rest of your life. Delaying further often will cost you more than you’d get for the brief period you rely on your own retirement benefit.

2. Maximize the survivor benefit

When your spouse passes away, you have the option of claiming survivor benefits. The amount is based on what the deceased spouse received from Social Security.

In order to maximize the potential survivor benefit if the higher-earning spouse passes away first, it may make sense for the higher-earning spouse to wait until 70 to apply. If the lower-earning spouse ends up being the surviving spouse, then increased benefits will be available. If the lower-earning spouse passes first, then the surviving spouse will still maximize their monthly payment amount by waiting until 70.

3. Consider the impact of working while collecting benefits

If you go back to work after you start collecting Social Security but before you reach full retirement age, the government may defer some of your benefits. Your benefits are reduced by $1 for every $2 you earn above $18,960 in 2021. It’s $1 for every $3 above a higher threshold of $50,520 if you reach full retirement age this year. Depending on how you look at it, that can be either good or bad.

For every monthly check you miss because of this provision, you’ll get credit for claim one month later than you actually did. Your payments will get recalculated once you reach full retirement age. This is an option for those that may consider part-time work in retirement, but want the stability of a guaranteed monthly income. If you earn enough from working, it can have the same result as delaying your benefits until full retirement age.

4. Optimize your taxes in retirement

A portion of your Social Security benefits becomes taxable when your combined income reaches a certain threshold. The IRS defines combined income as half your Social Security benefits, plus your adjusted gross income, plus nontaxable interest.

You want to maximize your Social Security benefit while minimizing your adjusted gross income. You can do that by carefully planning retirement account distributions. Minimizing taxes over your lifetime may involve converting a portion of your tax-deferred retirement accounts to a Roth account prior to applying for Social Security.

You may also consider harvesting capital gains before beginning Social Security payments to increase your cost basis for future asset sales while taking Social Security.

5. Suspend your benefits or withdraw your application

If you took Social Security early, but decided you don’t actually need the payments now and would prefer a bigger check later, you can suspend your benefits or withdraw your application.

If it’s been less than 12 months since you applied for Social Security, you have the option to withdraw your application. If you successfully withdraw, it’ll be like you never applied for Social Security benefits in the first place. You’ll have to repay every dollar you’ve received, but you can delay benefits until age 70 to maximize your Social Security checks.

If it’s been more than 12 months, but you’ve reached full retirement age, you can suspend your benefits. Suspending your benefits doesn’t require you to pay anything back to Social Security, and it lets your retirement benefits compound at 8% per year until you reach age 70.

If you suspend your benefits, it’ll also disallow your spouse or children from collecting benefits based on your record. And you can’t suspend your own benefits and then take a spousal benefit.

The best time to start planning for Social Security

There’s only so much you can do to increase your Social Security checks once you start collecting your benefits. The best time to start planning for Social Security is well before you apply. Make sure you and your spouse understand the complexities of Social Security, and work together to maximize your combined benefits.

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