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Social Security provides benefits to millions of Americans, many of whom are retired. Even if you still have many years in the workforce ahead of you, it pays to learn about the different ways you can eke more money out of the program. Here are some key tips for maximizing your Social Security — and enjoying a higher income stream once your time in the labor force comes to an end.
1. Grow your earnings as much as you can
Social Security doesn’t pay everyone the same benefit. Rather, the amount of money you’ll be entitled to in retirement will hinge on how much you earn during your career. If you’re able to boost your income, you could set yourself up for higher benefits down the line.
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Keep in mind that wages only count for Social Security purposes up to a certain point. This year, earnings beyond $147,000 aren’t factored into Social Security benefits, and next year, that threshold could increase. But for the most part, boosting your income is a good way to score a higher benefit, so make an effort to grow your job skills to set yourself up for added pay.
You may also want to look at getting a side job to boost your income. As long as you pay taxes on those wages, they’ll count for Social Security purposes.
2. Work at least 35 years
Social Security takes your 35 highest-paid years of wages into account when calculating your benefits. If you don’t work a full 35 years, you’ll have a $0 factored into that formula for each year you’re missing an income — so you’ll want to make sure you have at least 35 years of earnings on record.
3. Extend your career once your earnings have peaked
Even if you reach the end of your career having worked 35 years, it could still pay to plug away at your job a bit longer. If your salary is at its highest once you’re ready to retire, working a few more years will mean replacing years of lower earnings with higher ones. The result? A higher benefit to look forward to.
4. Make sure your earnings record is spot-on
Each year, the Social Security Administration (SSA) issues workers an earnings statement summarizing their wages. It’s important to review those statements and make sure they’re correct. If your income is underreported, it could result in a lower monthly benefit down the line.
If you’re 60 or older, you should receive your annual earnings statement in the mail. Otherwise, you can create an account on the SSA’s website and access that information online.
5. File for benefits at the right time
The earliest age you can sign up for Social Security is age 62, but if you file before full retirement age (FRA), you’ll be looking at a reduced benefit. FRA depends on your year of birth, as follows:
Year of Birth
Full Retirement Age
1943-1954
66
1955
66 and 2 months
1956
66 and 4 months
1957
66 and 6 months
1958
66 and 8 months
1959
66 and 10 months
1960 or later
67
Data source: Social Security Administration.
You can also delay your filing past FRA. For each year you do, up until age 70, your benefit will grow 8%.
Delaying your filing will clearly leave you with more money on a monthly basis. But before you make that call, think about whether it will mean getting the most money on a lifetime basis. If you don’t expect to live very long (say, because of health issues or even your personal family history), then it could make more financial sense for you to claim benefits at FRA or even sooner to snag the highest lifetime payout.
6. Coordinate with your spouse
It may be the case that both you and your spouse are eligible for Social Security benefits based on your respective earnings records. If so, you have some options to look at.
You could decide to have the higher earner delay their filing as long as possible while the lower earner signs up for benefits at FRA or even sooner. This move especially makes sense if the lower earner is expected to outlive the higher earner to a substantial degree.
Furthermore, if you earned a lot less than your spouse, you might manage to increase your monthly payments by claiming spousal benefits. Once your spouse files for Social Security, you can claim a spousal benefit on their record. And if you’ve reached FRA by the time you file, your spousal benefit will equal half of what your spouse collects each month.
So, let’s say that based on your own earnings record, you’re entitled to a monthly Social Security benefit of $1,200. If your spouse’s benefit amounts to $3,000, bumping your benefit up to a spousal benefit will give you $1,500 a month instead.
To be clear, you can’t double dip and claim your own Social Security benefit plus a spousal benefit at the same time. But you can definitely claim the higher of the two.
Get the most money possible
Social Security could end up becoming an important income source for you in retirement. Do your best to read up on the program so you’re in the best position to collect as much money as possible.
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