Collecting Social Security checks is simply a matter of signing up, but if you want the biggest checks possible, you have to start laying a foundation long before you claim. You need to understand how the government calculates your benefit, so you can use that information to your advantage. It sounds complicated, but if you follow the steps listed below, you'll be off to a good start.
Maximize your AIME
The first step the government takes in calculating your Social Security benefit is to figure out your average indexed monthly earnings (AIME). It's your average monthly earnings over your 35 highest-earning years with adjustments for inflation. The higher this number is, the larger your Social Security checks will be.
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There are two basic steps to maximizing it. First, you have to work at least 35 years. This ensures no zero-income years weigh down your benefit. Working even longer is usually beneficial because people tend to earn more later in their careers. These extra higher-earning years replace some of their earlier, lower-earning years, resulting in a higher AIME.
The other thing you should do is try to increase your income today. That might be easier said than done, but anything you can do to raise your income will help increase your AIME. That could involve switching employers, asking for a raise, or starting a side hustle.
Sign up at the right time
The government uses your AIME to calculate your benefit at your full retirement age (FRA). That's somewhere between 66 and 67, depending on your birth year. But you can sign up for Social Security as early as 62 if you'd like.
Signing up early reduces your monthly checks, though. If you claim right away at 62, you'll only get 70% of your full benefit per check if your FRA is 67. Those with a FRA of 66 get 75% of their full benefit per check when they sign up at 62.
That doesn't mean you should always delay. If you don't believe you'll live past your 70s or you need Social Security to help you cover your living expenses, starting early could be the right choice. But if you don't need the money right away and anticipate living a reasonably long life, you could get more money by delaying benefits.
Every month you wait to sign up increases your checks slightly until you reach your maximum benefit at 70. That's 124% of your full benefit per check if your FRA is 67 or 132% if your FRA is 66.
If you're not sure which starting age makes the most sense for you, create a my Social Security account to estimate your monthly benefit at various starting ages. Then, multiply this by the number of months you expect to receive benefits to figure out which gives you the largest lifetime benefit. For example, if you qualify for a $1,000 benefit at 62 and believe you'll live until 82, you'd get a lifetime benefit of $240,000 ($1,000 x 12 months x 20 years = $240,000).
Coordinate with other household members
Married couples can maximize their household benefits by choosing both spouses' starting ages carefully. When both have earned similar amounts over their lifetimes, each will likely claim on their own work records. In this case, it makes sense for both to delay benefits as long as possible.
When one spouse has earned significantly more than the other, it's more important for the higher earner to delay benefits. If necessary, the lower earner can sign up to help the couple out financially until the higher earner is ready to claim. Then, the Social Security Administration will automatically switch the lower earner over to a spousal benefit -- up to 50% of the higher earner's Social Security benefit -- if it would give them more than what they qualify for on their own.
Though rare, you may be able to claim Social Security benefits for others in your household as well, like minor or disabled children. Take advantage of all the benefits your household qualifies for to help your personal savings stretch even further.
It's a good idea to have a Social Security plan in place, even if you're a long way off from retirement. It could change over time, but by having a rough idea of what you intend to do, you can easily work out how much you need to save on your own in order to cover all your living expenses in retirement.
