How Can I Boost My Social Security Benefits?

Millions of seniors collect Social Security in retirement, and if you expect those benefits to provide a large chunk of your future income, you'll want to do everything in your power to increase them. The later you file for Social Security, the higher your benefits stand to be, but there are other strategies you can employ to raise them as well. Here, we'll tell you everything you need to know about boosting your Social Security income.

How Social Security benefits are calculated

Before we talk about boosting your benefits, let's review what goes into calculating them in the first place. Your benefits are determined by applying a specific formula to your average wages during your 35 highest years of earnings. However, you're only entitled to receive your full monthly benefits once you reach full retirement age, or FRA.

IMAGE SOURCE: GETTY IMAGES.

FRA depends on your year of birth; you can consult this table to see what yours is:

DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.

That said, you're allowed to file for Social Security as early as age 62, but you should know that for each month you file ahead of FRA, your benefits will be reduced on what's generally -- though not always -- a permanent basis. Technically, you can undo your benefits application once in your lifetime if you file too early, and then claim benefits again at a later point in time. But to do so, you'll need to repay every dollar you collected in Social Security, and that's often not feasible. Therefore, many seniors find that the monthly benefit they start off collecting is the same amount they continue to receive for life, not including cost-of-living adjustments, or COLAs, that are applied to their benefits annually.

With all of this in mind, here are a few things you can do to increase your Social Security benefits on a permanent basis.

1. Delay benefits past full retirement age

Just as your benefits will be reduced if you claim Social Security before FRA, so too can you grow your benefits by holding off on filing past FRA. In doing so, you'll accrue what are known as delayed retirement credits that boost your benefits on a lifelong basis.

Delayed retirement credits are worth two-thirds of 1% for each month you file for Social Security after FRA. That amounts to 8% a year. However, you can only accumulate delayed retirement credits up until age 70, so once you reach that age, there's no sense in delaying benefits any longer.

Filing for Social Security at age 70 will result in a 24% to 32% increase in benefits, depending on your FRA. Of course, you don't need to delay Social Security all the way until age 70 to increase your benefits. If you're only able to put off filing until 68, for example, you'll still snag an 8% to 16% boost in those monthly payments, depending on your FRA.

The following table illustrates the financial upside of delaying benefits past FRA:

TABLE AND CALCULATIONS BY AUTHOR.

Keep in mind that the higher your benefits are to begin with, the more of a raise you get each time a COLA is applied to them. COLAs aren't guaranteed; they fluctuate from year to year, as they're calculated based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But if, for example, a 2% COLA comes through in a given year, and you're entitled to a monthly benefit of $1,600, you're looking at a $32 monthly raise. With a monthly benefit of $1,984, that becomes more like a $40 raise. And when you're on a fixed income, those small differences can add up over time.

Clearly, there's a lot to potentially be gained by delaying benefits past FRA. But keep in mind that while doing so may increase your benefits on a monthly basis, it won't necessarily do so on a lifetime basis.

One interesting thing about Social Security is that it's designed to pay you the same lifetime total regardless of when you initially file. The logic is that by filing early, you'll reduce your monthly benefit, but you'll also collect a greater number of individual payments. When you delay benefits, the opposite happens -- you collect more money each month, but fewer payments.

All of this, however, assumes that you'll live an average lifespan. Currently, the Social Security Administration (SSA) expects a man reaching age 65 today to live until 84, on average, and expects a woman reaching 65 today to live until 86 1/2, on average. However, if you pass away at an age that's much earlier than these averages, you'll generally lose out on lifetime Social Security income by delaying benefits past FRA, despite the increase in monthly benefits you get.

Here's how such a scenario could play out: Imagine you're entitled to $1,600 a month at an FRA of 67. Waiting until age 70 to file will increase each monthly payment you collect to $1,984, but you'll collect 36 fewer individual payments. If you wind up living until 82 1/2, you'll break even under both scenarios -- meaning, you'll collect a total of $297,600, regardless of whether you file at 67 or at 70. From that point on, for each month you live past 82 1/2, you'll come out ahead in lifetime Social Security income by filing at 70 instead of 67.

But watch what happens if you pass away at age 79 -- not exactly young, but well below average life expectancy for today's seniors. In that scenario, you'd actually lose out on $16,128 of lifetime Social Security income by delaying benefits until age 70 rather than filing at your FRA of 67.

The takeaway? Delaying benefits past FRA is a smart move, but only if you're in good health. If your health is poor, you're generally better off filing earlier, especially if a medical professional has already advised that you're likely to pass away at a relatively young age.

Of course, if your health is poor due to habits you maintain, like eating poorly, smoking, or not exercising, then it may be within your power to change your fate. But only delay benefits if you're willing to put in the effort, because if not, then you'll likely collect more lifetime income from Social Security by filing on the early side.

2. Extend your career

Your Social Security benefits are calculated based on your average monthly income during your 35 highest-paid years of wages. Those wages are adjusted for inflation and divided by 420 (35 years times 12 months) to arrive at your average indexed monthly earnings, or AIME. A formula is then applied to your AIME to determine how much income you're entitled to in retirement.

Keep in mind that on an annual basis, the only earnings that get factored into your benefits calculation are those that fall below Social Security's earnings cap for taxable wages. That earnings cap changes from year to year, and in 2019, it's $132,900. This means that wages above that threshold don't get counted for Social Security purposes.

What does all of this have to do with working longer? It's simple. If you don't have a full 35 years of work under your belt, you'll get a $0 factored into your benefits calculation for each year you're without an income on record. The more $0s you have, the lower your benefits stand to be. On the other hand, if you extend your career a few extra years, you can replace some $0 years with an actual income, thereby bringing up your AIME and boosting your benefits in the process.

The same holds true if you're near the end of your career and are earning much more now than you did years ago. Remember, only your top 35 years of earnings will be factored into your Social Security benefits, but if you're currently earning $120,000, and spent most of your career earning between $60,000 and $80,000, replacing a few years of lower earnings with higher earnings could make a huge difference as far as your benefits go.

3. Review your earnings statements for errors

Each year, the SSA issues you an earnings statement that summarizes your taxable wages. Your earnings statement also contains an estimate of your Social Security benefits in retirement. The older you are, the more accurate that estimate becomes, but if you're fairly young, understand that your future earnings, or lack thereof, could cause that number to change -- a lot.

Workers are encouraged to review their earnings statements annually for errors, and to report mistakes to the SSA. But many don't take this step. That's partly due to the fact that only workers aged 60 and over get those earnings statements directly by mail. If you're younger than 60, you'll need to create an account on the SSA's website and access that information there. A report from the Social Security Office of the Inspector General released earlier this year, however, found that only 43% of registered users on the SSA's website have accessed their earnings statements in 2018.

The problem, of course, is that if you don't review your earnings statement for errors each year, you risk having your benefits take a hit. Why might that happen? Imagine the SSA only has $50,000 of taxable income for you on record for a year in which you actually earned $100,000. Or, worse yet, the SSA shows no income for you on file. Such mix-ups can happen when you share the same name as someone else, or when your employer simply fails to report wages the way it's supposed to. But when they do, they can result in a lower benefit by skewing the numbers in your personal calculation. (Keep in mind, though, that earnings above the annual wage cap won't be listed on your earnings statement, since they're not factored into your benefits. Don't confuse this policy on the SSA's part with an error on your record.)

Now this isn't to say that such glaring errors happen all the time; but they can happen. On the other hand, if you make a point to review your earnings information year after year, you could wind up boosting your benefits by setting the SSA straight.

But don't drag your feet if you spot an error -- the SSA only gives you three years, three months, and 15 days after the year in which your wages were paid or you earned self-employment income to correct mistakes on your earnings statements. Past that point, you can still make corrections under limited circumstances, but it could become a more complicated process. Remember, to prove an error, you'll need to provide documentation such as pay stubs or W-2s that make your case, and in some scenarios, that could require going back to a former employer and asking for those statements. Wait too long, and you risk a situation where that old employer is no longer in business, or doesn't have a record of the information you're looking for.

4. Fight for raises throughout your career

The more money you earn (up to a certain point -- remember the aforementioned wage cap), the higher your Social Security benefits stand to be once you're ready to claim them. Advocating for raises during your career could therefore not only put more money in your pocket from year to year, but also help you snag an increase in benefits.

Of course, getting a raise is easier said than done, but there are things you can do to improve your odds. First and foremost, always do your research. Sites like Glassdoor and Salary.com let you compare salary data within your industry so you can see how your personal earnings stack up. If you do some digging and find that the average person in your geographic region with your job title earns $60,000 a year, and you're only at $48,000, that's data you can put in front of your boss to make quite a compelling argument.

You'll also have a better shot at scoring a raise if you ask for it at the right time. If your company is in the midst of revenue crisis, you may be better off waiting to make that request. But if your company recently announced an uptick in earnings, it pays to pounce.

It also helps to time your raise request to follow a major achievement on your part. For example, if you recently closed a major sales deal, or implemented a new internal database that will streamline processes across a wide range of teams, then your employer may be more inclined to add a little money to your paycheck.

Finally, you'll increase your chances of success on the raise front by putting together a solid pitch that focuses on the value you bring to your company. If you're that person who's constantly called upon to head up new projects, pitch in after-hours or on weekends when emergencies strike, or mentor new employees, then be sure to use that information to your advantage.

Of course, if you're not successful in getting a raise, and you've done your industry research and know that there's room for an increase, then you can always dust off your resume and apply for a job elsewhere. Along these lines, if your employer won't grant you a raise based on your current role, you can try boosting your skills to snag a promotion that comes with an increase in pay.

It pays to boost your benefits

Social Security is designed to replace about 40% of your pre-retirement income, assuming you were an average earner. Most seniors, however, are advised to aim for 70% to 80% or more of their former income, depending on their desired retirement lifestyle and goals. This means you'll need an additional source of income outside of those benefits to live comfortably. That additional income source could be savings in an IRA or 401(k). Or, it could be earnings from a part-time job or small business.

That said, if you're approaching retirement with little in the way of personal savings, or you have health issues that you know will prevent you from earning money as a senior, then it pays to boost your Social Security income as much as you can. In fact, among those collecting retirement benefits at present, an estimated 21% of married couples and 45% of unmarried recipients depend on Social Security for 90% or more of their income. If that's the boat you expect to be in once retirement rolls around, then be sure to do everything within your power to get as much money from Social Security as possible.