Did you know that decisions you make throughout your life will affect your Social Security retirement benefits? In fact, while the age when you claim benefits affects the amount you receive, some of the most important factors determining your check size are already largely baked in by the time you get close to retirement.
That means if you want to get the most benefits possible, you'll need to make the right moves early on. Here are three such moves to consider.
1. Maximize your lifetime earnings
The single most important factor in determining the size of your benefits is the amount you earn during your lifetime. That means you have to earn as much as you can if you want the largest possible Social Security check.
To do that, take the opportunity to negotiate your salary when you start a new job and to negotiate raises at your annual performance review. Improve your skills throughout your career so you become a more valuable employee. And consider working some overtime or taking on a side gig during years when your income isn't as high as you'd like it to be.
You can also boost your lifetime earnings by working longer toward the end of your career if your earnings have peaked. This is an effective way to raise your benefit amount because Social Security looks at your earnings in the 35 years your income was highest (after adjusting for inflation). If you work longer at peak earnings, those years you earned more can replace years you earned less when your lifetime wages are calculated.
2. Optimize your tax situation
Part of your Social Security benefits become subject to federal tax once you have countable income totaling $25,000 or higher as a single filer or $32,000 or higher as a married joint filer. But not all income is countable.
Only half your Social Security benefits count, along with taxable income from other sources. If you save for retirement in a Roth IRA or Roth 401(k), your distributions aren't taxable so don't count. That means you can take as much money out to spend as you want without reducing your benefits.
Saving in a Roth is just one way to maximize your Social Security benefits by avoiding owing tax on them. You can also make sure you retire in one of the majority of states that won't charge you a state tax on benefits, rather than the 13 (soon to be 12) that take some of your money under at least some circumstances.
3. Vote with your benefits in mind
Social Security is probably going to have to be reformed, most likely within the next decade, because otherwise the program's trust fund will run dry and a cut to retirement benefits of as much as 24% would have to occur.
There are lots of competing proposals for how to change the program, including raising the age at which you'd receive your full benefit amount. But there are also other alternatives that would actually increase the amount retirees would receive.
If your goal is to get the largest benefit possible, always read up on every candidate's position on Social Security before you cast a vote in federal elections.
Understand all your options for maximizing your Social Security checks
Once you near retirement age, you can also raise your benefits by delaying claiming benefits until at least full retirement age or later. And while that choice can make a big difference, you'll be in a much better position if you've already taken steps to raise the earnings your benefits are based on, to make sure you won't owe taxes on your Social Security, and to help stave off benefits cuts that are inevitable if lawmakers don't act quickly.