70.6 million people receive benefits from programs run by the Social Security Administration. In fact, at least 40% of older Americans rely solely on Social Security for retirement. However, very few people know there are strategies to maximize your Social Security benefits. 

Understanding how Social Security operates can help you increase your monthly payout and secure a more comfortable retirement. This article will outline eight key strategies to assist you in maximizing your benefits and making the most of them.

1. Work for at Least 35 Years

Maximizing the benefit amount you receive each month is the foundation of getting the most out of Social Security. Your benefits are based on a complex formula that considers your highest 35 years of indexed earnings. This means that if you don’t work for 35 years, the years you didn’t work will count as $0s, significantly reducing your benefit. 

Let’s say that you only worked for 30 years and have 5 years with no earnings on your record. Those 5 years will be counted as $0 in your earning history, significantly lowering your AIME and, ultimately, your monthly benefit. 

The solution? Working more. Consider extending your career path or taking on part-time work to fill any gaps. Even an additional year of earnings can significantly boost your benefit amount. 

2. Delay Claiming Benefits Until Full Retirement Age

You can start collecting Social Security as early as 62, but this will permanently reduce your monthly benefit. Sometimes, claiming at 62 makes sense, but for most people, it’s best to wait until your full retirement age. 

Social Security is designed to provide you with a specific amount of income throughout your retirement. By claiming early, you’re essentially receiving a smaller portion of your total benefit over a longer period. 

Waiting until your full retirement age allows you to receive your full benefit amount. This ensures you have a more stable and secure income stream throughout your retirement. You can also delay past your full retirement age to boost your benefits even more, with your benefits maxing out at 70. That said, waiting until 70 to claim Social Security isn’t the best choice for everyone, but it can be a solid option if you expect to live a long life. 

3. Consider Spousal Benefits

Don’t forget about spousal benefits! If you’re married, you may be eligible to receive up to 50% of your spouse’s benefit amount, even if you never worked yourself. This can be a huge boost to your overall retirement income, especially if your spouse has a much bigger earning history than you. 

You can also start collecting benefits as early as 62, even if your spouse hasn’t retired yet. However, like with claiming your own Social Security, your benefits may be diminished! This added flexibility is great if you and your spouse are of different ages, though. 

4. Maximize Your Earnings

The more you earn, the more your Social Security benefit will be. There’s a cap on earnings used for calculating benefits, though. This changes every year, but for 2024, that cap is $132,900. Any more than that doesn’t count towards more benefits. You’d have to hit this cap for 35 years for the absolutely maximum amount of Social Security. 

If you are self-employed, paying Social Security taxes on all your earnings is crucial. This ensures you get credit for your income and maximize your potential benefit. Unlike traditional employees, it’s up to contractors and self-employed individuals to pay their Social Security taxes to ensure they qualify for Social Security taxes. 

5. Keep Track of Your Earnings and Estimated Benefits

The Social Security Administration offers a free tool called “my Social Security” that helps you plan for your Social Security. This resource allows you to view your earnings history, estimate your benefits, and ensure you have the proper contact information. 

It’s important to review your earning history regularly to ensure it’s accurate. Any discrepancies could potentially impact your Social Security benefits. If you get too many benefits, it can be just as bad as getting too little, as you’ll often have to repay it. 

Additionally, checking your estimated benefits can help you plan your retirement budget and make informed decisions about when to claim your benefits.

6. Plan for Potential Taxed Benefits

While Social Security benefits are generally not taxed, a portion of them can be taxed depending on your total income. If your income (including Social Security) is higher than a certain threshold, up to 85% of your Social Security benefits may be subject to taxes. 

Understand your tax implications to ensure you know how much money you’ll have in your pocket each month. Don’t forget to include all the potential income you’ll be receiving, such as rental income and pensions. 

7. Consider Consulting a Financial Advisor

A financial advisor can be a valuable asset in helping you navigate the complexities of Social Security. Depending on your situation, your Social Security taxes can be quite complicated. You need to integrate it into your overall retirement plan, and you need to understand how much Social Security you’re getting to do that!

Based on your individual circumstances, a financial advisor can help you determine the best time to claim your benefits to maximize your total lifetime benefit. 

You should also ensure your Social Security benefits work seamlessly with other retirement income sources like pensions. Other retirement income sources like pensions and investment withdrawals can create a predictable income stream. 

Financial advisors can help you develop tax-efficient strategies to minimize the impact of taxes on your Social Security benefits. 

8. Social Security for Working Retirees

If you plan to keep working after reaching your FRA, understand that this may impact your benefits. There’s an “earning test” that can temporarily reduce your benefits if you earn above a certain amount. However, these earnings can also increase your future benefits once you fully retire. 

Strategic planning around your working schedule and making decisions can help you make the most of your benefit schedule. Despite the fact that it decreases your current benefits (potentially), the extra boost to your later benefits may be helpful. 

9. Consider Retiring Early with a Spouse’s Benefits

While claiming your own benefits early leads to a permanent reduction, you might be eligible for spousal benefits based on your spouse’s earnings record. If your spouse has a higher earnings potential than you, you could potentially claim spousal benefits early at 62 while delaying your own claim. 

This allows you to access some retirement income early while still allowing your benefits to grow. 

10. Explore Survivor Benefits

Social Security offers survivor benefits to spouses and dependent children of deceased workers. It’s important to understand these benefits and how they may factor into your family’s financial security. While no one plans to draw these benefits, they can be extremely helpful in emergencies when your spouse dies unexpectedly. 

In some cases, your survivor’s benefits may equal up to 100% of the deceased worker’s benefit amount. 

11. Get Help From the Social Security Administration

The Social Security Administration offers tons of resources to help you understand your benefits. They even have a dedicated website where you can sign up for a free account to track your benefits. You can also call a toll-free helpline for any questions you have. Many areas also have a local field office where you can speak to a representative. 

Don’t hesitate to utilize these resources to get personalized information about your specific situation. If you have a very complicated financial situation, these resources can help you figure out exactly how much you’ll expect to get in Social Security benefits. 

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