Filing for Social Security is a major milestone in a retiree's life, and it's truly in your best interests to do the work beforehand to figure out your optimal filing time. There are a few simple ways to score a higher monthly check, and we'll visit four of them below; in short, those who earn more money and who wait longer to file are those who ultimately reap the highest benefit.
1. Boost your income
The amount you collect in Social Security benefits is directly related to the amount you earned during your 35 highest-paid years as a worker. To qualify for the maximum Social Security credit in 2022, you'll need to earn $147,000; this amount has steadily increased since the inception of the Social Security Administration (SSA) in 1935.
Earning the highest monthly check would require earning the maximum Social Security wage base in your 35 highest-paid years. In 2022, the maximum benefit is $3,345 per month if you retire at full retirement age (FRA), or $4,194 per month if you wait to claim benefits until age 70.
Note that even if you don't earn the maximum credit every year, you'll still be doing a lot to increase your monthly benefit simply by earning more. By dong so, you'll pay additional tax into the SSA's system, but you'll also receive a higher monthly check when you claim benefits.
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2. Delay filing for benefits
Waiting until age 70 to file for benefits, regardless of the amount you've earned over your career, will universally qualify you for a higher benefit check. You'll be eligible for roughly 8% more in lifetime benefits for every year you decide to defer, but the latest you'll be able to claim and still get the 8% boost is age 70.
This can work especially well for people who have robust investment portfolios or annuitized streams of income, like pension payments. If you can afford to wait to claim benefits, you generally should, as you'll end up with a far higher check that's both perpetual and inflation-adjusted.
3. Take advantage of spousal benefits
Spousal benefits entitle the lower-earning spouse to claim a benefit based on that lower salary or 50% of their spouse's benefit check, whichever benefit is higher. This is a factor as long as the lower-earning spouse has reached age 62, and the higher-earning spouse is currently collecting checks from the SSA.
If the higher-earning spouse were to pass away before claiming benefits, the lower-earning spouse would be entitled to the deceased's full benefit amount, provided that the survivor has reached age 60. The big point here is that you'll need to have a candid conversation with your spouse to thoroughly examine your options before one or both of you decide to file for benefits.
4. Take a do-over if necessary
If you retroactively decide that taking benefits early wasn't the best move, you have within a calendar year to pay back all benefits received; this effectively undoes your filing. If you choose this road, you'll still be eligible for the 8% annual benefit increase up until the time you file. So if you decide you really don't need the money now, you can set yourself up for a more-robust stream of inflation-adjusted income many years down the line.
This is one of the few times you'll have a chance to undo what's already been done, and you only have one chance to do it, so use your mulligan wisely. At the same time, you should realize this is a very real option in the event your circumstances change, and you shouldn't be afraid to use it if necessary.
How and when you file matters
There are many people so excited to leave the workforce that they'll claim benefits at 62, not realizing that this could cost them thousands in the long run, especially if they're in relatively good health. On the other hand, the decision to claim benefits at any age can be justified, depending on your life circumstances and, most prominently, your need for the extra money.
Generally speaking, to earn a higher check you'll need to have earned significant amounts of income over your working career in addition to delaying your claim for benefits. Through spousal benefits and the optional do-over, there are a few side doors to claiming a higher check, too. Overall, only you can make the decision to claim Social Security, and ideally you'll do so after a careful analysis of your total financial picture.
