Social Security has seen better days. Though seniors received the largest cost-of-living adjustment (COLA) in decades this year, the program only has about 10 years left until it becomes insolvent.
There's still time for the government to step in before benefit cuts become necessary, but we don't know what the final solution will look like. However, we can be pretty sure the following three tips will still help you squeeze as much as possible out of the program.
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1. Work at least 35 years
The current Social Security benefit formula calculates your checks based on your average monthly earnings over your 35 highest-earning years. You can qualify with a shorter work history, but it's generally best to work at least 35 years before claiming if you can.
When you apply for Social Security with fewer years of reported income, the government includes zero-income years in your benefit calculation, and this negatively impacts your checks. If you earned $50,000 (adjusted for inflation) annually for 35 years, your primary insurance amount (PIA) would be about $1,980 per month based on the current benefit formula. But if you had a zero-income year factored in, you'd only get about $1,942 per month. That $38 difference amounts to over $9,100 less over 20 years.
Some proposals to remedy Social Security's shortfall include raising the number of years you have to work to avoid zero-income years in your benefit calculation. This may not happen, but it doesn't hurt to work longer if you're able to do so.
Many people earn more later in their careers than they did when they were just starting out. Once you've passed the 35-year mark, the Social Security Administration takes these lower-earning years out of your benefit calculation and replaces them with higher-earning years. That helps increase your checks.
2. Boost your income today
Your Social Security benefit will remain tied to your income during your working years no matter what. So anything you can do to raise your salary now will likely lead to larger Social Security checks in retirement.
Seeking out better-paying employment, working overtime, or starting a side hustle are all smart ways to increase your annual income. You might also consider pursuing additional education in your field to open up new job opportunities in the future.
The only people this tip won't help are those who already earn high incomes. In 2023, the government only charges Social Security tax on the first $160,200 you earn. Some lawmakers want to eliminate this ceiling to increase revenue for the program. But for the time being, any income over this amount won't help grow your benefit checks.
3. Choose your starting age carefully
You can claim Social Security as young as 62, but you must wait until your full retirement age (FRA) if you hope to claim the PIA you've earned based on your work history. Your FRA depends on your birth year but is currently somewhere between 66 and 67.
Claiming Social Security early shrinks your checks by up to 30% under the current benefit formula, while delaying benefits increases them. You can delay past your FRA, too, and your checks will continue to grow until you reach 70. At this age, you qualify for anywhere from 124% to 132% of your PIA per check.
Some proposals to fix Social Security involve raising the earliest age at which you're eligible for benefits, the FRA, or both. But regardless of what happens, you'll still get larger checks by delaying benefits than you would by claiming early.
But that doesn't mean delaying benefits is always the way to go. You have to consider your life expectancy and your financial situation. Those who don't expect to live beyond their 70s or who need their Social Security checks to keep a roof over their heads are often better off signing up earlier.
It doesn't hurt to have a provisional Social Security strategy in mind, even if you're not yet old enough to claim. But be prepared to adapt if the government makes any significant changes to how your benefits are calculated. You may have to change your retirement timeline or how much you're saving on your own in order to cover the expenses Social Security won't.
