Social Security is a particularly important piece of almost any pre-retiree's financial plan. Given the current inflationary environment, Social Security stands to play an even more prominent role in retirement plans going forward. This makes it critical to know how to get the most out of your monthly checks long before you file for benefits.
Here, you'll learn three ways to lock in an even higher Social Security benefit.
1. Delay your claim
As simple as it sounds, this is the best way to lock in a higher monthly check without having been an especially high earner during your working career. Relative to claiming benefits at 62, you'll earn incrementally higher benefit checks for every year you defer, plus at least some level of inflation protection (delivered through annual cost-of-living adjustments, or "COLAs").
For instance, assuming you were born after 1960 and your full retirement age ("FRA") is 67, you'll receive 70% less by claiming benefits at age 62 than at FRA. On the flip side, you'll lock in lifetime checks at 124% of your standard FRA benefit if you wait until age 70 to file your claim.
Given the dearth of sound defined-benefit pension plans, you'll be much better equipped to delay your claim if you have substantial savings in the form of 401(k)s and IRAs, or if you choose to continue working in your 60s before you file your Social Security claim. So if you do decide to delay filing, be sure to have a plan in place to carry you through your 60s.
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2. Earn more
The Social Security system functions much like a traditional insurance arrangement: You pay Social Security premiums as you earn money, and then receive benefits later in life -- presumably after you've retired from full-time work.
Another particularly effective way to increase your monthly checks in retirement is to earn more, or as close to the maximum taxable wage base as possible. The maximum taxable wage base has increased steadily since the SSA's inception, and currently stands at $147,000 in 2022.
Workers earning at least this amount will receive maximum credit toward future retirement benefits. Even if you don't earn this much every year, try to earn as much as possible to secure yourself a more substantial Social Security check.
3. Work for at least 35 years
Recall that your Social Security benefit calculation will use your annual earnings over a 35-year working career. To be clear, this calculation takes into account your highest 35 years of earning, not the most recent 35 years. So you have an opportunity to increase your benefit checks at pre-retirement if you had some zero-income years earlier in your life.
It's entirely possible that over a working career, you have taken or will need to take time away from work to address any number of life occurrences (having a baby, caring for an elderly parent, etc.) If you've had periods of little or no work, you might consider working for at least a few years as you enter your 60s -- even on a part-time basis -- to boost your Social Security checks.
Know the basics
Getting a higher Social Security check is an achievable goal, as long as you know the rules of the game and follow them. The reality is that the highest- and longest-earning individuals stand to benefit the most from Social Security checks -- why not be one of them?
Those who delay filing their claim for benefits to age 70 and earn at least the maximum taxable wage base for at least 35 years will lock in the highest checks. But even if you aren't receiving the maximum possible benefit, earning more in any capacity -- or waiting a year to collect benefits -- is going to get you closer to a higher check.
