If you haven't socked away enough money to live off of in retirement, or you're not on track to do so, the Social Security income you collect in retirement will be especially important to you. Even if you have saved a hefty nest egg, the more income, the better, right? An extra, say, $20,000 or $30,000 per year can mean a much more enjoyable and financially secure future.
Here's a quick look at three effective strategies for boosting your Social Security benefits.
Image source: Getty Images.
1. Work longer and earn more
First off, know that the formula used by the Social Security Administration (SSA) to determine our benefits is based on our incomes (adjusted for inflation) in the 35 years in which we earned the most. So you should aim, at a minimum, to work 35 years, if possible -- because every year less than that will result in a zero being incorporated into the calculations.
Better still, you might work beyond 35 years -- because if near the end of your career you're earning much more than you did before (on an inflation-adjusted basis), then each year you work beyond 35 years will kick a low-earning year out of the calculations.
Maximizing your income, then, is a very effective way to boost your benefits. You might achieve that by climbing your career ladder aggressively and enjoying frequent big raises, but there are other ways, too. For example, you might take on one or more side gigs, such as tutoring kids, driving for a ride-sharing service, selling crafts you make, and so on.
2. Work longer and delay starting to collect your benefits
Another way to boost your Social Security benefits is to delay starting to collect them. Each of us has a "full retirement age" (FRA) at which we can start collecting the full benefits to which we're entitled based on our earnings history. For most of us, that's age 66 or 67 -- but you can actually start collecting as early as age 62 or as late as age 70.
Starting earlier will make your checks smaller -- though you'll receive more of them, making up potentially much or all of the difference. Delaying will make your checks bigger. The table below shows how much of your full benefits you can expect to collect based on when you start collecting them:
|
Start Collecting at: |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Data source: Social Security Administration.
Image source: Getty Images.
3. Coordinate with your spouse
Finally, if you're married, spend a little time researching Social Security strategies with your spouse -- or consult a financial advisor or planner for some guidance. For example, if you both have similar earnings histories, you might both try to delay collecting until age 70, to maximize your future household income. If one has earned significantly more, though, it's often good to prioritize maximizing that benefit, so if you both need or want to start collecting one spouse's benefits, you might opt for the lower-earner's, to let the higher-earner's benefit grow larger still.
The more you learn about Social Security, the more you may be able to get out of the vital program. It can be the income that supplements what you've saved, enabling you to have the income you'll need in retirement.
