Your Social Security payment amount is determined by how much you earn while working and when you elect to start receiving payments. Married individuals are additionally eligible for spousal and survivor’s payments. But there are many strategies you can use to increase how much you will receive in retirement. Here’s how to get the highest Social Security payment you qualify for.
Work 35 or more years.
Your Social Security payments are calculated using your 35 highest-earning years in the workforce. If you don’t work for at least 35 years, zeros are factored into the calculation and reduce your payments. Even a low-earning year is better than having a zero averaged in.
Earn a higher salary.
The more you earn and pay into Social Security up to the taxable maximum of $137,700 in 2020, the higher your retirement payments will be. Earnings above the taxable maximum are not subject to Social Security taxes or used to calculate your benefit. Working an extra year, even after you retire, could increase your future payments if you now earn more than you did earlier in your career.
Don’t claim before your Social Security full retirement age.
Social Security monthly benefits are reduced if you start payments before your full retirement age, which is 66 for most baby boomers and 67 for everyone born in 1960 or later. Workers who sign up at age 62 will get 25% smaller monthly payments if their full retirement age is 66 and a 30% benefit reduction if their full retirement age is 67.
Consider delaying Social Security until age 70.
If you delay claiming Social Security past your full retirement age, you will accrue delayed retirement credits that will increase your monthly payments by 8% for each year of delay. After age 70, there is no additional incentive to delay starting your payments.
Suspend your Social Security payments.
If you took a reduced Social Security benefit, it’s not too late to boost your payments. Social Security beneficiaries who are between full retirement age and age 70 can suspend Social Security payments and earn delayed retirement credits. This will increase your benefit by 8% for each year of suspension up until age 70, or as much as 32% if you suspend your payments for four years.
Pay back your Social Security benefit.
If you change your mind within 12 months of signing up for Social Security, you can repay all the money you and your family have received, without interest, and withdraw your Social Security application. You can then apply for Social Security payments again at a later date, and the monthly payments will then be larger due to delayed claiming. However, each beneficiary can only use this option once.
Use a Social Security spousal benefits strategy.
Married individuals are eligible to claim Social Security payments worth up to 50% of their spouse’s benefit if that amount is higher than their own payment. To get the full 50%, you need to sign up for Social Security spousal payments at your full retirement age, which is 66 for most baby boomers. Spousal payments are reduced if you claim them before your full retirement age. Ex-spouses are also eligible for spousal payments if the marriage lasted at least 10 years.
Maximize Social Security survivor benefits.
When one member of a retired married couple passes away, the surviving spouse can inherit the deceased spouse’s Social Security payment if that amount is higher than his or her current monthly payment. Married couples can increase the Social Security benefit the surviving spouse will receive by having the higher earner delay claiming Social Security. A one-time death payment of $255 can also be claimed by a widow or widower if he or she was living with the deceased or receiving Social Security benefits on the deceased’s record.
Claim Social Security survivor benefits for children.
The children of a deceased worker can qualify for payments until they turn age 18 or 19 while a full-time high school student. A widow or widower who is caring for a dependent child under age 16 or a disabled child who developed a disability before age 22 could also qualify for payments. However, there’s a Social Security family maximum of 150% to 180% of the worker’s benefit, and if all qualifying family members exceed this limit, each person’s benefit is reduced.
Estimate your longevity.
The most effective Social Security claiming strategy for you depends on how long you will live. If you have a major health problem, it can make sense to claim benefits as soon as possible (unless you want to leave a higher benefit to a surviving spouse). If you’re healthy and have parents who lived into their 90s, there’s a case to be made for delaying claiming your benefit in order to receive a higher Social Security payment in your 70s, 80s and beyond.
Consider these Social Security claiming strategies:
Work 35 or more years.
Earn a higher salary.
Don’t claim before your Social Security full retirement age.
Consider delaying Social Security until age 70.
Suspend your Social Security payments.
Pay back your Social Security benefit.
Use a Social Security spousal benefits strategy.
Maximize Social Security survivor benefits.
Claim Social Security survivor benefits for children.
