Social Security is the backbone of many Americans' retirement budgets. The government program accounts for at least 50% of household income for about half of people aged 65 and older, according to data reviewed by the Social Security Administration. So, getting a bigger Social Security check can have a massive impact on the quality of your life in retirement.
The key to getting a bigger check is a keen understanding of how the rules work. Unfortunately, the complexities of Social Security are too much for many Americans, and many hold false beliefs about how the system works. But if you know these five secrets, you could end up with a bigger Social Security check when all is said and done.
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1. Work at least 35 years
The simplest way to increase your Social Security benefit is to make sure you work at least 35 years. Your monthly benefit is based on your average monthly earnings (adjusted for wage inflation) over 35 years. If you work fewer than 35 years, the Social Security Administration fills in the missing years with $0 earned. Replacing that $0 with the income from a job or even just a few thousand dollars from a side hustle could result in a nice bump to your benefits for the rest of your life.
One thing to be aware of if you're already collecting benefits is the Social Security earnings test. The earnings test applies to anyone who hasn't yet reached full retirement age. If you earn over a certain threshold, the Social Security Administration will withhold some of your current benefits. In other words, you'll see your monthly check decrease. Don't worry, though. The SSA will adjust your benefit higher when you reach full retirement age to make up for the withheld amount.
2. Work well into your 60s
The Social Security Administration adjusts your wages from your 20s and 30s for increases in the standard of living each year. But those adjustments stop when you turn 60.
Most people continuing their career into their 60s are earning more than they did in their 20s and 30s, even after adjusting for inflation. But even if your inflation-adjusted earnings haven't increased, continuing to work in your 60s will ultimately replace those early earning years when the SSA calculates your 35 highest-earning years. As a result, you'll get a bigger benefit check.
3. Suspend your benefits
If you're past full retirement age but less than 70 years old, you have the option to suspend your benefits. When you suspend your benefits, you'll start accruing delayed retirement credits. Those will add 2/3 of a percentage point to your check for each month you keep your benefits suspended. Benefits automatically resume at age 70. You can boost your benefit up to 26.7% depending on when you were born.
This can be a great option for someone who claimed benefits early in retirement, but has gone back to work or has seen their investments perform well. If you don't have an immediate need for supplemental income, it might make sense to suspend benefits today in exchange for a bigger Social Security check later.
4. Pay attention to taxes
The IRS uses a metric called combined income to determine what portion (if any) of your Social Security income is taxable. Your combined income is equal to half your Social Security benefits plus your adjusted gross income plus any nontaxable interest income. If your combined income exceeds certain thresholds, a percentage of the amount exceeding it becomes taxable. Here are the thresholds.
| Amount Taxable | Combined Income (Single) | Combined Income (Joint) |
|---|---|---|
| 0% | Less than $25,000 | Less than $32,000 |
| Up to 50% | Between $25,000 and $34,000 | Between $32,000 and $44,000 |
| Up to 85% | More than $34,000 | More than $44,000 |
Data source: Social Security Administration.
If you can keep your combined income below the major thresholds, you can keep more of your Social Security check.
5. Be smart about survivor benefits
Survivor benefits can be claimed as early as age 60, but claiming as soon as possible might not be the smartest decision.
Widows and widowers have the favorable option of being able to claim their survivor benefit and personal benefit at different times. Spouses with living partners must file for both personal and spousal benefits at the same time. The ability to apply at different times means you should claim one of those benefits as soon as possible and the other as late as necessary to receive the maximum.
For example, if your full survivor benefit is $1,500 per month and your full personal benefit is $1,000 per month, it likely makes sense to wait until 62 to claim your personal benefit and switch to your survivor benefit when it maxes out at 67. The opposite could also be true, leading you to claim the survivor benefit at 60 and wait until 70 to switch to your personal benefit.
If you properly manage your Social Security options, you can come away with significantly higher lifetime benefits.
