There are very few sources of income that guarantee you'll get more money when inflation is surging and that guarantee your benefits will last for life. Social Security is one of those income sources, so doing your best to maximize your benefits makes sense.
Several time-tested strategies can raise your monthly benefits. One of the most obvious is to wait to claim them because they go up each month from your earliest age of eligibility until age 70. Each month you don't get benefits during this time results in an increase.
However, there are some other ways to increase your checks as well, including one that many people may not know about. Here's a surprising and often overlooked option for giving your Social Security benefits a boost.
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This unexpected move can increase your Social Security checks
One way that you can increase your check that many people overlook is by continuing to work and earn a higher income after you have claimed benefits.
While this won't work for everyone, it works for many people because Social Security benefits are based on your average wages during your 35 highest-earning years. And Social Security does not stop tracking your wages or stop recalculating your benefit amount just because you have claimed it.
Let's say, for example, that you begin your Social Security benefits at age 70, because that's the age when you can max out your delayed retirement credits, so there's no benefit to waiting beyond that. But you still enjoy your job, and you decide that you don't want to quit working -- particularly because you're earning a good living.
Any wages you earn after you've started collecting Social Security are still reported, and they become part of your earnings record. If you have a higher-earning year at age 70 or 71 (or whatever age you've reached) than you did earlier in your career, the Social Security Administration would replace one of your prior lower-earning years in your benefits calculation.
The more years you work into "retirement" at your higher income, the more lower-earning earlier years you can push out of your list of the 35 years included when your benefits are calculated. And this happens automatically; you don't need to do anything. The Social Security Administration does this recalculation for you, and your benefits will increase.
Since many people increase their earnings over time as they develop new skills and get promotions, this technique could make a big impact on increasing your benefits -- especially if you previously had some years that you didn't make very much included in your average.
Is this approach right for you?
Should part of your retirement planning process include continuing to work after claiming Social Security if you're earning a high income later in life? It depends.
One key thing to know is that if you have not yet reached your full retirement age (FRA) and you're working while collecting benefits, you could end up forfeiting some of your benefits temporarily. If you earn too much by working while collecting Social Security, then your checks are reduced or even eliminated based on how much you earn over a set threshold (which changes each year due to inflation).
This isn't necessarily a bad thing, as your benefit can go up for two reasons: you're earning a higher average wage to include in the 35 years that are part of your benefits formula, and because you get credit for months of missed benefits once you hit your FRA. Your monthly payment is adjusted to account for forfeited benefits. However, it means that double-dipping and earning a hefty salary while getting benefits isn't allowed until you've reached your FRA.
You'll also have to consider whether you want to work longer. If you have plenty of money in your 401(k), then it may not be worth it for you to keep plugging away at your job just to get a larger Social Security benefit. But if your retirement funds are looking a little skimpy, then it makes a lot more sense to try to boost your benefit.
Ultimately, you'll need to look at your overall financial situation, current earnings compared to past earnings, and your retirement goals to decide if this strategy could be a good one for you.
