After paying taxes to fund Social Security throughout your career, you deserve all the benefits you've earned from the program. It makes sense to look for whatever strategies can help you maximize your Social Security income, and there are some steps you can take both during your career and in the run-up to retirement that will make a potentially huge difference to how much you receive.
The key decision: When to start taking Social Security benefits
The thing that those approaching retirement have the most control over is when to start taking Social Security benefits. Depending on when you decide to start receiving Social Security checks, your benefits can vary dramatically. Waiting until age 70 can boost your monthly retirement check by more than three-quarters compared to what you'd receive at age 62. Put another way, claiming at your earliest possible opportunity will cut what you receive by about 43% compared to what you could get if you waited eight more years.
Not everyone has the luxury of being in a financial position to wait to take benefits, but if you do have some flexibility, it's worth looking at the trade-offs involved in claiming early versus later. Different types of benefits have different rules, but in most cases, waiting to claim your Social Security benefits will result in your getting larger monthly checks.
If you're still in the middle of your career, look to earn the most you can
Social Security benefits are based on your earnings, and in general, the more you earn, the greater your monthly benefit will be. The calculation that the Social Security Administration does to figure your benefits takes inflation-adjusted earnings from up to 35 years of your career, and so every penny you earn during the first 35 years you work has the potential to increase your benefit. Even once you pass the 35-year mark, a new year of high earnings can replace an older year with lower earnings, increasing your Social Security benefit.
Keep in mind that moves you make to increase your earnings not only affect your retirement benefits but also any spousal or family benefits based on your work record. Therefore, if you expect your spouse, children, or other eligible family members to claim Social Security benefits that are calculated using your earnings, then working a bit harder or longer can give your family additional boosts to their total income when the time comes.
Don't overlook other types of Social Security benefits
Most people focus on their Social Security retirement benefit, because it's the thing that they have the most control over. However, there are other benefits under Social Security, and it's important to know what they are in order to plan for them well.
For instance, during your career, disability benefits are available to you if you meet the SSA's definitions of disability. If you're married, then you can become entitled to receive spousal benefits based on your spouse's work history as soon as your spouse applies for retirement benefits, if you meet the age requirements and other provisions. Children can receive Social Security benefits based on a retiree's work history under certain circumstances, as can dependent parents. Survivor benefits are available for your spouse and eligible children upon your death, and they can enhance your overall family income as well. Knowing all of the available benefits is crucial if you don't want to miss out on any Social Security money.
Social Security can be hard to navigate, but given how important it is to make the most of the program, it's worth the effort to figure it out. By making the most of your benefits, you can make Social Security work harder toward creating financial security when you retire and beyond.