Are you looking to squeeze every last possible dime from your retirement benefits? If so, good! You worked hard for them, and you deserve to make the most of what you contributed.
To that end, while some work-related benefit plans are already set in stone, there are a few ways you can still ratchet up your future Social Security payments if you haven't started receiving them yet. Here's a rundown of the best and easiest ways to boost your monthly Social Security payout once you're ready to start collecting.
1. Wait until you turn 70 to file for benefits
You're allowed to claim Social Security benefits as early as 62 years of age. Just know that doing so will seriously crimp the amount of your monthly payment. For example, let's assume you've turned 62 this year, and you know you're eligible for a $2,000 monthly benefit at your full retirement age of 67. If you were to start collecting Social Security retirement benefits as soon as possible, your benefit would shrink to $1,400. The gap widens even further when you consider the fact you could be scoring $2,480 per month if you waited until age 70 to start taking payments.
While eight years may seem like a long time to wait for that maximum benefit, do know that you're eligible for your max payout the month you turn 70. You may as well file then, since waiting any longer doesn't result in a bigger payment. Indeed, although the SSA will retroactively pay you if you don't start taking benefits the month you turn 70, it will only cover up to six months of missed benefits, so be sure to file no later than six months after you turn 70.
2. Work at least 35 full calendar (tax) years
There's no maximum number of years or hours you're allowed to earn taxable, work-based income. The SSA will simply continue charging you Federal Insurance Contributions Act (FICA) taxes as long as you have a paying job, even if you're working after you've turned 70. Indeed, the government-run program will continue taxing your wages even if you're already receiving Social Security retirement benefits.
At the same time, there's only a minimal amount of work you have to do in your lifetime to qualify for Social Security benefits. You must earn 40 "credits" to be eligible for any Social Security income, and you can earn a maximum of only four credits per year. But you'll receive one credit for every $1,640 you earn; earning $6,560 in a single year will give you your maximum of four credits. For most people, getting past this minimum threshold is a given -- it's only 10 years' worth of part-time work, after all.
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But what's this got do with maximizing your future monthly benefits? It may pay to make sure you're working and earning all the way through the end of the last tax/calendar year you work.
See, for the purpose of calculating your eventual monthly payment, the Social Security Administration considers only the 35 years during which you earned (relatively, adjusted for inflation) the most money. If you've worked 39 years but were a relatively high earner in only 34 of them, for example, it might be worth toughing out one more high-paying year.
In the same vein, if you've already got your minimum of 40 credits on the books but are still earning good money in the year in which you want to call it quits, consider sticking with it just a few more months to get that one last full year of earnings in. Even if you don't work a full 35 years, one more good year will still boost your overall benefits calculation based on your best-earning years.
3. Look at all your spousal benefits options
Last but not least, if you're a widow or widower or are divorced, you may be eligible for more Social Security retirement benefits than you realize.
It's complicated. In fact, it's so complicated that you may want to consult with an attorney or financial advisor who specializes in such matters to get a handle on your particular situation. At the very least, discuss all your options in person at your nearest Social Security office.
The gist is, however, that you may be eligible for part or all of the benefits otherwise earmarked for a former spouse ... including a deceased one. Depending on the underlying circumstances and your age (and your spouse's age at death, if applicable), you may qualify for 100% of your former partner's potential payments. If there are any minor children in the picture, they may also be eligible for additional benefits above and beyond these payments.
Again, these matters and the calculation of their corresponding benefits can get very complicated very quickly -- so much so that many people don't bother dealing with them. That's a big mistake. Addressing these complexities could mean hundreds of dollars in additional benefits per month, if not more.
