Will You Join The 6% of Americans Who Know How to Maximize Their Social Security Income?

For most people, there’s just a single source of retirement income that’s protected against the effects of inflation, which is also guaranteed to last for life: Social Security. Since these retirement benefits are your surest bet when it comes to supporting yourself as a senior, it stands to reason you’d want to know how to make the most of them.

Unfortunately, many people simply don’t understand how to maximize the retirement income Social Security provides. In fact, a recent survey conducted by Nationwide revealed only 6% of Americans correctly identified the four factors that impact the amount of benefits coming from the Social Security Administration.

If you want to be among this 6%, here are four things to know about that affect how much income you receive.

Image source: Getty Images.

1. Your work history

The amount you earned over your career plays a huge role when it comes to calculating Social Security benefits. In fact, the entire formula is based around it.

To determine how much retirement income you’ll receive, here are four things to keep in mind:

Wages during your entire career are adjusted for inflation.
Your 35 highest-earning years are identified.
Your monthly inflation-adjusted average wage during those years is calculated.
You receive benefits equaling a percentage of that inflation-adjusted average monthly wage.

As you can see, the length of your work history matters a lot. Anyone who works less than 35 years will have $0 earning years included in the calculation of the average wage used to set benefits. And anyone who works longer can push out low-earning years, since they’ll have more than 35 years of wage history that could potentially count.

Income over your career also impacts benefits, which is why it’s important to aggressively advocate on your behalf for wage increases and when pursuing new, better-paying job opportunities.

2. Your age

Your age also affects the size of your checks. That’s because the standard benefit calculated using the formula described above is only available at a designated full retirement age, and your FRA is determined by when you were born.

This chart shows different FRAs based on birth year so you can understand how your age affects the amount of Social Security income you’ll get.

Birth Year

Full Retirement Age




66 and two months


66 and four months


66 and six months


66 and eight months


66 and 10 months

1960 and later


Data source: Social Security Administration.

3. The start date of your benefits

Although you get your standard benefit only if you first claim it at full retirement age, there’s no requirement to actually begin receiving payments then. In fact, you have the option to receive your first retirement check any time between ages 62 and 70.

Your choice of start date will heavily affect your payment amount, though. That’s because:

Filing up to 36 months before full retirement age results in an early filing penalty totaling five-ninths of 1% per month. Early filing penalties permanently shrink benefits, and they add up to a 6.7% annual reduction for each full year you’re early for the first three years.
Filing more than 36 months before FRA results in an additional early filing penalty totaling five-twelfths of 1% per month. This is another 5% annual reduction in benefits. So someone who claims at 62 despite having a full retirement age of 67 would get 30% less than their standard benefit
Filing after FRA results in a delayed retirement credit equaling two-thirds of 1% per month until age 70. That means each year benefits aren’t received after FRA will result in an 8% raise

Carefully consider how early filing penalties or late retirement credits will impact your payments, depending when you start checks relative to full retirement age.

4. Your marital status

Finally, marital status affects your Social Security checks because those who are married or who divorced after 10 years could also be entitled to spousal and survivor benefits. These are benefits claimed based on a partner’s work history instead of your own, and they could be bigger than your own Social Security payment if your spouse was the higher earner.

Decisions you make can impact how much spousal or survivor benefits are worth and when they can be claimed, so married couples must coordinate to maximize combined monthly and lifetime income.

Now you know the key factors affecting benefits and are among the 6% of Americans who can make the best, most informed choices about Social Security income as a retiree.

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