Social Security can go a long way in retirement, especially if your savings are lacking. The estimated median retirement savings among baby boomers is just $194,000, according to a 2024 report from the Transamerica Center for Retirement Studies, and a whopping 43% of boomers expect Social Security to be their primary source of income once they retire.
If you're going to be relying heavily on your benefits, it's wise to make the most of them. The right approach can boost your payments significantly, sometimes by hundreds of dollars per month. With these three lesser-known strategies, you could earn more than you might think.
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1. You can reverse your claiming decision if you change your mind
In general, your benefit amount is locked in for life once you begin claiming (with the exception of cost-of-living adjustments). But if you file early and change your mind, there is an opportunity for a do-over.
Within 12 months of filing, you can withdraw your application. You will need to pay back all the benefits you've already received, but then you're free to file again at a later date.
If you've missed the 12-month window or can't afford to repay your benefits, you also have the option to suspend Social Security. Once you reach your full retirement age, you can essentially press pause on collecting checks up to age 70. When you begin receiving benefits again, you'll collect larger payments each month.
The average retiree collects nearly $740 more per month at age 70 than at age 62, according to 2023 data from the Social Security Administration. Filing early will lock in those smaller payments, but if you want a second chance at larger checks, withdrawing or suspending Social Security can substantially boost your benefit amount.
2. The length of your career affects your benefit amount
Most people are aware that your earnings and the age you begin claiming will affect the amount you receive each month. But another lesser-known factor is how many years you've worked.
In general, you can qualify for retirement benefits after working and paying Social Security taxes for at least 10 years. But your benefit amount is calculated using an average of your wages throughout the 35 years you earned the most. If you've worked fewer than 35 years, you'll have zeros included in your average -- which will reduce your benefit amount.
To really make the most of your benefit, you can also work for more than 35 years. Chances are you're earning a higher wage now than you were early in your career. Because only your highest-earning years are included in your calculations, the more years you work with a higher salary, the higher your earnings average will be -- resulting in a larger monthly payment.
3. Roth account contributions can lower your taxes
Even in retirement, you may still be subject to income taxes. Social Security income is no exception, and you could owe both state and federal taxes on your benefits.
Fortunately, most states don't tax Social Security anymore, so you're likely already off the hook for that type of tax. Federal taxes, though, are a bit more complicated.
Your federal taxes will depend on a figure called your provisional income. This is half of your annual benefit amount plus your adjusted gross income and any nontaxable interest. For example, if you're earning $20,000 per year in benefits while also withdrawing $40,000 per year from your 401(k), your provisional income would be $50,000 per year.
| Percentage of Your Benefits Subject to Federal Taxes | Provisional Income: Individual Tax Filers | Provisional Income: Married Couples Filing Jointly |
|---|---|---|
| 0% | Under $25,000 per year | Under $32,000 per year |
| Up to 50% | $25,000 to $34,000 per year | $32,000 to $44,000 per year |
| Up to 85% | More than $34,000 per year | More than $44,000 per year |
Source: Social Security Administration. Table by author.
However, there is a big loophole here: Roth account withdrawals don't count toward your provisional income.
In the previous example, you're pulling money from a 401(k), and your provisional income is $50,000 per year. That would put you in the highest tax bracket, and you'd owe federal taxes on up to 85% of your benefit. But if you were to take that money from a Roth IRA instead, your provisional income would be just $10,000 per year. In that case, you wouldn't owe any federal taxes on your benefits.
There isn't necessarily a right or wrong Social Security strategy, but certain moves can help maximize your benefits. The more you know about how the program works, the easier it will be to set yourself up for a more financially secure retirement.
