Approximately 69 million Americans receive Social Security payments annually.1 Set yourself up for success in your golden years by exploring these six essential ways to maximize your Social Security benefits! Whether you're already retired or planning for the future, it's important to stay informed. Below, we'll explore how lifetime earnings, delayed retirement, spousal benefits, and more can play a key role in making the most of these hard-earned benefits.
1. Check Your Earnings History
Everyone makes mistakes, even the Social Security Administration! A simple keystroke error by your employer or an incorrectly reported Social Security number could negatively impact future Social Security benefits. That's why it's crucial to review your Social Security statement's reported earnings history on an annual basis. It's easier to catch an error now than try to fix it once you begin receiving benefits.
Gone are the days of having to visit your local Social Security office, as the SSA makes it easy to access your earnings history online once you create a my Social Security account. If you do find an error, call 1-800-772-1213. The my Social Security account is also a one-stop shop for details on eligibility for Medicare, disability, and survivor benefits. And once you begin claiming your benefits, you don't have to wait for a check in the mail! Follow our step-by-step Social Security direct deposit guide for more details.
From the Pros: Stay up to date on your estimated Social Security benefits! A my Social Security account provides access to personalized estimates based on your earnings history.
2. Maximize Your Lifetime Earnings
The Social Security Administration determines your Social Security benefits based on how much you've made across your 35 highest years of income. Working longer and earning a higher salary can boost the size of your benefit check.
If you've worked less than 35 years, the SSA will assign zeros to those non-working years, causing a reduction in benefits. Even two to three no-income years can significantly reduce your total, so working at least 35 years puts you in the best position.
Inside Tip: Struggling to calculate how much money you need to retire comfortably? Our retirement guide walks you through retirement savings models, essential questions to consider, and how to start saving right away!
Your lifetime earnings also play a starring role in how your Social Security benefits are calculated, so another year of work could go a long way! Your top earning years will most likely come toward the end of your career. If you work a few more years before retiring, you can replace your low-income years with higher ones and increase your lifetime earnings.
3. Delay Your Retirement Benefits
The full retirement age (FRA) in the U.S. is based on the year and month you were born. For anyone born before 1960, the FRA is currently 66 years, plus a certain number of months. The full retirement age is 67 for those born in 1960 or later. If you wait until FRA to start your retirement benefits, you'll get 100 percent of your Social Security income. You've worked hard for your benefits, so why not get paid in full?
But what if you can earn more than 100 percent? There's an incentive to delay collecting your Social Security benefits for as long as possible. Waiting beyond full retirement age equals delayed retirement credits. The bottom line? A larger monthly benefit check. The SSA will increase your benefits incrementally for each month you delay receiving benefits after your FRA (until you reach age 70).
Whether you decide to claim early or at FRA, your Social Security benefits will receive an annual cost-of-living adjustment (COLA).
Did You Know: Delaying Social Security may be an excellent way to boost your benefits! On the contrary, delaying Medicare enrollment may take a toll on your wallet. If you don't sign up for Medicare during your initial enrollment period, you may face higher Medicare Part B and Part D prescription drug plan premiums. When in doubt, contact Medicare to confirm if you'll face a late enrollment penalty.
4. Consider Spousal Benefits
If you are married, one of you may claim your full spousal benefit, equal to 50 percent of the other person's retirement benefit. Even if you don't have an earnings record on your own (for example, you were home caring for a loved one), you're entitled to Social Security benefits. Spousal benefits can be claimed as early as age 62. However, claiming spousal benefits earlier than your full retirement age will result in a reduction of benefits. You and your spouse should have an in-depth discussion about these benefits, including if claiming them is advantageous to one of you, and when to begin receiving payments.
Spousal Survivor Benefits
Around 4 million widows and widowers receive Social Security benefits every month. These benefits are based on their deceased spouse’s earnings record.2 At full retirement age or older, a widow or widower would receive 100 percent of the deceased worker’s benefit amount. Spousal survivors can receive:
- Reduced benefits as early as age 50 if they have a disability AND their disability started before or within seven years of the spouse's death.
- Reduced benefits as early as age 60.
Divorced Spouse Benefits
If you're divorced, you may qualify for Social Security as a divorced spouse (up to 50 percent of your former spouse's benefits). To be eligible, you must:3
- Be divorced from someone who qualifies for or receives Social Security retirement or disability benefits.
- Have been married to that person for 10 or more years before the date the divorce was finalized.
- Be at least 62 years old.
- Not currently be married.
- Not be entitled to retirement or disability benefits based on your own work that are equal or higher than your divorced spouse benefits.
If your former spouse dies, you are entitled to surviving divorced spouse benefits. And if you wait until age 60 or later to remarry, it will not affect your eligibility for benefits.
Good to Know: Just like spousal benefits, claiming divorced spouse (or surviving divorced spouse) benefits earlier than your full retirement age will result in a reduction of benefits.
5. Rethink Early Retirement
Who doesn't dream of early retirement? While it may be tempting to start collecting your well-earned Social Security benefits at age 62 (the earliest you can collect benefits), your monthly Social Security benefits will be lower than if you had waited. This is why the age you decide to retire greatly impacts your benefit. For example, if you turned 62 in 2022, your benefit would be about 30 percent less than it would be at your FRA of 67.4
Take time to weigh the pros and cons of early retirement. A reduction in benefits could impact how you pay for planned or unexpected healthcare needs. According to Fidelity’s State of Retirement Planning Study, the average cost of out-of-pocket health care expenses for a couple retiring at age 65 is $295,000. Social Security isn't meant to be your sole source of income. However, receiving 100 percent of your Social Security benefits, or more, is certainly the optimal option!
Pro Tip: Our guide to Social Security for seniors covers everything you need to know about Social Security, from signing up to deciding when to take your benefits and everything in between!
6. Suspend Your Social Security Benefits
Already collecting Social Security? Did you know the SSA allows you to suspend your retirement benefits and restart them at a higher benefit level? This is an excellent avenue to explore if you're concerned you began collecting Social Security “too early” and want to boost your lifetime monthly payment.
If you reach FRA but are not yet 70 years old, you can choose a voluntary suspension of your benefit payments. By doing this, you'll earn delayed retirement credits for every month you suspend your benefits (resulting in a higher benefit payment to you).5 You can request to resume your Social Security benefits at any time. If you decide to wait until age 70, Social Security will automatically reinstate your benefits in the higher amount.6
FYI: The annual cost-of-living adjustment (COLA) plays a major factor in Social Security benefits, so keep a close eye on these important Social Security changes.
Knowledge is power! Prepare for retirement and financial security by taking the time to educate yourself on the benefits of Social Security. Armed with this knowledge, you can explore what works best for your future and how to get the most out of your hard-earned benefits.
In the video below, Jeff Hoyt, SeniorLiving.org's editor-in-chief, speaks with Mary Beth Franklin, author of “Maximizing Your Social Security Retirement Benefits.” Be sure to watch parts two and three of this valuable series!
Maximizing Your Social Security Benefits