If you want the maximum possible Social Security benefit, you should not wait until you are near retirement age to try to take steps to get it.
You'll need to plan and make strategic moves throughout your working life to get the biggest Social Security check as a senior. Specifically, here are three things you should be doing so you can supersize these future retirement benefits.
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1. Boost your earnings
Your Social Security benefit is based on average wages in the 35 years your inflation-adjusted earnings are the highest. So, the more you earn -- and the more years you earn a high salary -- the higher your future benefits will be.
Extra earnings from a business, a full-time job, or a side hustle can all help you earn higher Social Security checks in the future.
Every dollar you pay Social Security tax on will count toward your benefits calculation, so get serious about increasing your income as soon as possible. This could be done by taking on side jobs, negotiating raises and starting salaries when finding new work, and improving job skills to make you more employable at a higher rate.
2. Choose a Roth 401(k) or IRA
Taxes on Social Security benefits reduce the income Social Security actually ends up providing you once the government takes a cut. But you're only taxed on benefits if countable income exceeds $25,000 for single tax filers or $32,000 for married joint filers.
Depending on earnings, you could be taxed on up to 85% of benefits one you've exceeded these thresholds. And the income at which taxes kick in isn't adjusted due to inflation, so more people find themselves taxed each year on their benefits.
Only countable income counts in determining if you meet the threshold, though. That's half of all Social Security benefits, all taxable income, and certain non-taxable income such as MUNI bond interest. While some non-taxable income is part of countable income, distributions from Roth 401(k) and Roth IRA accounts are not. So, you can invest in these accounts, withdraw as much as you desire as a senior, and not see Social Security reduced due to federal tax.
3. Invest enough to put off a Social Security benefits claim
Finally, the last big step to take to maximize Social Security can be the hardest one. You need to invest enough money so you can live on your savings while you put off your claim for retirement checks.
See, Social Security benefits become available starting at age 62. But if you want the maximum monthly income, waiting until 70 is necessary. A delayed claim until 70 allows you to avoid any early filing penalties applicable if you were to claim benefits before full retirement age (FRA). A delayed claim also allows you to increase benefits through delayed retirement credits that can be earned after FRA until age 70.
Many people can't work until 70. They'll therefore need plenty of money saved to support themselves until they hit this milestone, if they don't want to start Social Security sooner because of their desire to maximize their monthly payment. So, if you are serious about doing everything you can to boost Social Security benefits, start investing today so you can afford to delay until 70 and get the biggest check you can.
