Social Security benefits are an important income source in retirement, so it often makes sense to try to maximize them.
If you're preparing for retirement soon, taking these three steps now can go a long way toward helping you get the largest Social Security checks possible.
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Consider putting off a benefit claim
Delaying a claim for Social Security benefits is one of the single most important steps you can take if you want a larger monthly payout.
You have a designated full retirement age (FRA) based on your birth year. It's between 66 and 6 months and 67. If you retire at 67, you receive your standard benefit based on average earnings. If you delay retirement benefits, you increase your monthly check amount. Benefits go up 2/3 of 1% per month of delay. This results in an 8% annual increase. You can keep raising your retirement payment until age 70. So if your FRA is 67, then you could get a 24% boost.
You'll want to avoid retiring before FRA, though, if your goal is the largest Social Security check. Although you can get your first payment starting at just 62 years of age, benefits are reduced for each month you claim them prior to FRA.
You'll also need to consider the average wages included when your standard benefit is calculated. Benefits are based on average earnings in the 35 years you earned the most (after adjusting for inflation). If you've worked for less than 35 years, delaying your claim to accrue a longer work history can help you avoid years of $0 wages being included in your benefit. And if you've worked 35 years or more, but your current earnings are higher than in the past, delaying to replace some lower-earning years with higher-earning ones in your benefits calculation could pay off.
Ultimately, since most people see their incomes rise over their career, a delayed claim usually benefits you in both ways, so you can substantially increase your check amount.
Make sure your state isn't taking part of your check
To increase your Social Security check, you'll also want to make sure you're keeping as much of it as you can.
The IRS taxes Social Security benefits once countable earnings exceed a certain threshold, and a minority of states do as well. While escaping IRS taxes is difficult if you're already close to retirement, you can avoid paying your state if you relocate.
If you live in one of the states that tax Social Security and your earnings are high enough that you're subject to these taxes, a move makes good sense. You effectively can get a bigger benefit by avoiding having to give your state government a cut.
Coordinate with your spouse to increase combined benefits
Finally, you should work together with your spouse to try to increase the combined income you're both receiving. Consider both spousal and survivor benefits when deciding who should claim Social Security and when.
If you're the higher earner, it may make sense for you to put off your claim for as long as possible. You'll grow your own monthly benefit and survivor benefits by doing so. Your lower-earning spouse could claim earlier to bring some money into the house while you wait and score larger checks for you both later.
By taking these steps, you can make sure you're making the most of your Social Security benefits. It's well worth the effort due to the importance these benefits will likely play in funding your retirement.
