Social Security is going to be around for you, whether you're retiring this year or decades from now. But it's difficult to say how much you'll get per month. Part of that depends on what changes the government makes to the program to keep it sustainable for generations to come. And part of it depends on what actions you take right now.
Yes, you have a lot of control over how much you get in Social Security benefits because they're based on your earnings during your working years. Here are four steps anyone can take right now to increase the size of their Social Security checks in retirement.
1. Verify the accuracy of your Social Security earnings record
The Social Security Administration maintains an earnings record for you based on your reported income from your tax returns each year. You can view yours by creating a my Social Security account. It's important to verify that your annual income is reported accurately because these are the numbers the government is going to use when determining your Social Security benefit. If it confuses you with someone else or if you or your employer transpose a few digits in your Social Security Number, your earnings might not be reported accurately, or worse, might not be reported at all.
Check your earnings record every year against your own tax returns to verify that the information is correct. If it's not, submit a Request for Correction of Earnings Record to the Social Security Administration along with any documents you have to verify your actual income for that year.
2. Work as many years as possible
Your Social Security benefit is based on your average monthly earnings over your 35 highest-earning years with adjustments for inflation. This is called your average indexed monthly earnings (AIME). If you work less than 35 years, you'll have zeroes weighing down your average, and if you worked less than 10 years, you won't qualify for Social Security at all based on your own work record. When you work more than 35 years, your lower-earning years drop off and are replaced by your higher-earning years.
Most people tend to earn more money later in their careers than when they're just starting out, so there's a good chance that you'll increase your AIME by continuing to work as long as you can, and this will in turn increase your benefits.
3. Do what you can to increase your income today
Anything you can do to increase your income today will also help increase your AIME and therefore your Social Security checks. This could mean pursuing promotions at your existing job, switching employers, or starting a side business of your own.
The important thing to remember is that only income you pay Social Security taxes on will help increase your Social Security checks. Money you earn from a side business doesn't have Social Security taxes taken out of it like a regular paycheck, so you must remember to do this on your own. Don't try to hide that money from the government because it won't help your Social Security benefits and you could get audited.
While it won't affect most people, you should also note that there's a $137,700 ceiling on earnings subject to Social Security tax in 2020. If you earn more than that, that's great, but that extra income won't help your Social Security benefits because you're not paying Social Security taxes on it.
4. Plan to delay Social Security if possible
You can start Social Security as early as 62, but if you want the full amount you're entitled to based on your AIME, you must wait until you hit your full retirement age (FRA). This is 66 or 67, depending on your birth year. Starting early reduces the size of your checks. You'll only get 70% of your scheduled benefit if you start claiming at 62 and your FRA is 67. Those with a FRA of 66 get 75% of their scheduled benefit per check if they start claiming at 62.
Delaying benefits works the other way. You can delay benefits up until 70 and your checks will increase until you reach the maximum of 124% of your scheduled benefit per check if your FRA is 67, or 132% if your FRA is 66.
Not everyone can afford to delay their Social Security benefits because they need them to cover their living expenses, but if you can do so and you expect to live a reasonably long life, you'll probably get the most out of Social Security by delaying benefits.
Coordinate with your spouse if you have one. The lower-earning spouse can start claiming benefits as soon as possible to help the higher-earning spouse delay benefits until 70 when they're entitled to a larger amount per check. Then, the Social Security Administration will automatically switch over the lower-earning spouse to a spousal benefit if this would give them more money.
There's no way to know exactly how much you'll get from Social Security until you're ready to start claiming it because there are a lot of variables involved. But if you follow the steps above, you can feel confident that you're doing your best to maximize the benefits you're entitled to.