While Social Security shouldn’t be your only source of income before retirement, you can start to rely on those benefits pretty heavily once your career is over. And so it is in your best interest to get as much money out of Social Security as possible. These smart moves on your part can result in a higher advantage – for life.
1. Postpone your submission as long as possible
You are entitled to your full monthly Social Security benefit at the so-called full retirement age or FRA. FRA starts at age 66, 67 or somewhere in between, depending on your year of birth.
You can claim Social Security as early as age 62, but if you submit before FRA, you will receive a lower monthly benefit for life. On the other hand, if you delay your filing beyond FRA, you will permanently enjoy a higher benefit.
For each month that your application is delayed beyond FRA, your benefit will be increased by 2/3 of 1%. That equates to an increase of 8% on an annual basis.
Once you turn 70, you won’t be able to grow your benefit, so there’s no point in delaying your application beyond that point. But if your FRA is 67 and you wait to file until age 70, your benefits will be 24% higher.
2. Coordinate with your spouse for instant cash and increased benefit
If you and your spouse are each entitled to Social Security, you have a good chance of capitalizing. We just learned that delaying your application will result in a higher payday. But waiting for those benefits may mean delaying retirement or putting off other goals like travel.
A better bet, if you’re dealing with two sets of benefits, might be to have one spouse claim Social Security at FRA or even earlier, and have the other spouse delay filing for as long as possible. If you go this way, you will get one benefit so that it pays more for life, while the other benefit will serve as a direct source of income.
3. Work more than 35 years
The monthly Social Security benefit you are entitled to is based on your earnings during your 35 most profitable years in the workforce. But you can increase your benefit by working more than 35 years.
Chances are that your earnings will be higher at the end of your career than at the start. Suppose by the time you reach age 67 you are earning $100,000 a year, and that amount is much higher than your lowest wage in your 35 best years of earnings. If you extend your career by a year, you replace a year of lower wages with an income of $100,000. That, in turn, can give you a higher monthly benefit in the long run.
Even though you may have retirement income outside of Social Security, it’s still important to get as many of your benefits as possible. These strategies can lead to a more generous Social Security paycheck — and more financial freedom during your senior years.