Did you know that you can make your Social Security payments 24% bigger than your standard benefit? Doing so could help you more easily afford all of your essential costs -- especially later in retirement when your money might be running short.
So how can you score this big benefits boost? Here's what you need to do.
Timing is key to collecting an extra 24% each month
If you want a Social Security check that's bigger than your standard benefit, you can make that happen by putting off your initial claim until long after you first become eligible for benefits.
You are allowed to take Social Security checks any time between ages 62 and 70. However, based on your birth year, your full retirement age (FRA) determines when you will get your standard benefit amount (also called your primary insurance amount, or PIA).
Your FRA is between 66 and four months and 67 if you were born in 1956 or later. If you claim your first Social Security payment at exactly that time, you will get benefits equal to a percent of your average wages during the 35 years your inflation-adjusted earnings were highest.
But here's where the opportunity to increase your benefits comes in. For any month you wait to get your first payment after FRA, your standard benefit is increased by two-thirds of 1%. If you do the math on this, that means your payment will go up by 8% annually.
You're allowed to increase your standard benefit only until age 70, though. So if you have an FRA of 67, you can boost your Social Security benefit by 24% but no more than that.
Should you put off your benefits claim to score a 24% raise?
There are downsides to waiting until age 70 to claim your first retirement check, so you can't always assume this is the right move for you even if it does increase benefits by 24%.
Obviously, if you're waiting until the age of 70 to claim retirement benefits, you are forgoing years of payments that you could have collected. In fact, you can first claim Social Security at 62, well before your FRA -- although this would trigger early filing penalties that also reduce your benefit below your standard amount.
But even after forgoing years of checks, you can still break even due to the higher monthly payments you get as a result of waiting -- but only if you live long enough to get a sufficient number of checks. It can take many years for that to happen, so if you have health issues and don't expect to live a long time, an earlier claim might be better.
Putting off benefits until 70, though, can increase your chances of getting the most lifetime income, because many people outlive typical life expectancies and get higher checks for longer than they need to break even. For example, someone with an FRA of 67 who qualifies for the average Social Security benefit in 2022 of $1,661 would need to live to at least 82 to hit that break-even point. That may seem daunting at first glance, but the majority of people currently in their 50s and 60s are expected to see their 80th birthday.
If you were the higher earner, a delayed claim can also increase the survivor benefits your partner is entitled to. That's because the spouse who lives the longest can keep collecting the larger of the two Social Security checks that were coming into the home while both people were alive.
So if you think you'll live into your 80s or if you were the higher earner and you want to make sure your spouse is taken care of, getting this 24% benefit increase is usually well worth waiting until 70 to claim your first Social Security check.