If you want to get as much as you can from Social Security, you have to learn some of the basic strategies. By following a few simple guidelines, you can maximize both your own Social Security benefits and the benefits your surviving family members may receive.
With this in mind, three Motley Fool contributors shared some ways to make the most of Social Security. Read on to learn some ideas for making sure you get everything Social Security owes you when you retire.
One smart strategy to increase your Social Security benefits is either to delay your benefits as long as possible or, if you've already claimed and are under age 70, to suspend your benefits.
Your monthly Social Security benefits increase for each month that you delay receiving them. That's why it's generally a bad idea to claim Social Security benefits at 62, the earliest age allowable. It's also why most Motley Fool experts plan to take Social Security after their full retirement age.
If you've already claimed Social Security benefits, are under 70, and want to increase your monthly Social Security benefits, you can still take advantage of the delayed-retirement credits you receive for waiting. You simply have to suspend your benefits, and then you can once again let your benefit grow for every month you postpone receiving it. The magnitude of the increase will depend on how long you have already received Social Security benefits and how much longer you wait to receive them again.
If you've claimed Social Security benefits within the past year and have since decided you'd rather delay your benefits in order to receive delayed-retirement credits, you have another option. You can repay your Social Security benefits, and it will be as though you never claimed in the first place, allowing your Social Security benefit to grow.
Although your income will be lower while you wait to claim benefits, it's an investment that pays off for most people over the long run.
One of the keys to maximizing your Social Security benefits is understanding how the formula works and using it to your advantage.
Unlike many pension plans, Social Security isn't simply based on your final compensation or your past few years of earnings. In fact, Social Security uses the average income of your 35 highest-earning years (each year is indexed to compensate for inflation). So even if you earn a relatively high income when you claim Social Security, that doesn't necessarily mean your monthly benefit will reflect that, especially if a few low-income years are weighing down your average.
The Social Security Administration provides the index multipliers for all years since 1954, as well as a worksheet you can use to estimate your benefit, so see for yourself whether your 35-year average is where you thought it would be.
If your benefit is a little lower than you expected, and you have a relatively high income toward the end of your career, working a few more years longer than you may have planned could have quite an impact on your benefit.
If you don't have a substantial work history of your own, there aren't many ways you can increase your Social Security benefits. In fact, as unromantic as it sounds, practically the only thing you can do is get married to a spouse who does have extensive Social Security-eligible earnings and then claim benefits as a spouse.
In general, newly married spouses can claim Social Security spousal benefits after one year of marriage. An exception grants benefits faster to spouses who are both the parents of the same minor child. In addition to spousal benefits, you can also claim survivor benefits after your spouse passes away. To be eligible for survivor benefits, you typically must have been married for at least nine months. However, if the cause of your spouse's death is accidental, or if your spouse dies while actively serving in the military or other uniformed service, the nine-month limitation is usually waived.
One thing to keep in mind is that if you have benefits from a former spouse, then getting remarried can cause you to lose those prior benefits. Typically, those who were married for 10 years or more can still claim spousal benefits even if they've since divorced, using their ex-spouse's work history as if they were still married. But remarriage forces you to use your new spouse's work history, even if it leads to a lower amount.