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Social Security: 3 Smart Ways to Get More Benefits

By Dan Caplinger - Apr 5, 2016 at 12:03PM

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If you want more in retirement, here's how to get it.


Image source: SSA.

Social Security provides a huge portion of retirement income for most retirees, and so it's important to get as much as you can from the program. Although you don't have control over every aspect of what your Social Security benefit will be, there are some things you can do to boost your monthly payments. Let's look at three of them.

Maximize your Social Security earnings
The Social Security Administration calculates your retirement benefits based on a complex formula that incorporates your earnings from throughout your career. After indexing your annual earnings for inflation, the SSA takes the 35 highest-earning years of your career and determines your average indexed monthly earnings. That number then goes into a formula that produces what the SSA calls your primary insurance amount. The higher that number, the greater your retirement benefits will be.

There are two things you can do to boost your primary insurance amount. First, if you haven't yet worked 35 years, then every additional year you work will provide another year's worth of work history to add to the formula. Yet even if you already have 35 years of earnings, it's possible that working beyond the 35-year mark will replace the lowest-income year from earlier in your career with a higher-income one at the end. Either way, your monthly benefits will rise.

Taking advantage of family benefits
Social Security provides a patchwork of different benefits, and it's important to understand how they work together. Sometimes, what seems like a good decision when you only consider your individual situation might not give your family the best results from a big-picture perspective.

For instance, upon reaching the minimum Social Security age of 62, your spouse is entitled to claim a spousal benefit based on your work history. That benefit is typically equal to half of your retirement benefit at full retirement age, with further adjustments to take into account when your spouse chooses to start taking them. However, in order for your spouse to take spousal benefits, you must already have filed for Social Security benefits. With the file and suspend option set to disappear at the beginning of May, that will require that you claim benefits even if you might otherwise prefer to delay them until later. Depending on what assumptions you make, your family as a whole could be better off if you file earlier to activate spousal benefits for your spouse, rather than waiting and forcing your spouse to wait as well.

Other commonly misunderstood or little-known benefits include Social Security for eligible children and parents, as well as the rules for divorced spouses and the numerous survivor benefits that are available. If you don't know about all the possibilities, you can leave money on the table.

Being smart about timing
Most people know that Social Security benefits can grow if you wait longer to take them, but not everyone knows exactly how the rules work. For your own retirement benefits, you can claim as early as age 62, but the longer you wait between 62 and 70, the larger your monthly payments will eventually be.

The rules aren't identical for all benefits. With spousal benefits, there's a reduction for taking them before reaching full retirement age, which is currently 66 and slated to rise gradually to 67 by 2022. However, you can't get delayed retirement credits for spousal benefits after full retirement age. Therefore, waiting to take spousal benefits until age 70 is a mistake, as you won't get any larger of a check than if you claimed several years earlier.

Social Security has complex rules, but there are still relatively simple things you can do to boost your benefits. That way, you can maximize your retirement income with the goal of achieving financial security throughout your retired years.

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