Social Security benefits can make the difference between barely scraping by in retirement and living a comfortable and enjoyable lifestyle. For many people, those monthly checks are also the main source of income in retirement. In fact, approximately half of baby boomers say they expect to rely primarily on Social Security benefits to get by in retirement, according to a survey from American Advisors Group.
If you’re expecting Social Security to help you make ends meet during your senior years, it’s important to maximize your benefits the best way you can. One way to do that is to delay claiming benefits past your full retirement age (FRA) – which is 67 for those born in 1960 or later or either 66 or 66 and a few months for those born before 1960. By waiting to claim until after that age (up to 70), you’ll receive extra money each month on top of your full amount – up to 24% extra if you have an FRA of 67.
However, waiting to claim Social Security isn’t the only way to maximize your monthly checks. There are also a few other ways you can increase your benefits for the rest of your life.
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1. Work for more than 35 years
One factor that has a significant impact on how much you’ll receive in benefits is your income during your working years.
Your basic benefit amount (or the amount you’d receive by claiming benefits at your FRA) is based on the 35 highest-earning years of your career. If you work fewer than 35 years, you’ll have zeros added to your average to account for the years you weren’t working. As a result, that will lower your average and your basic benefit amount.
On the other hand, if you work more than 35 years, only your highest-earning years will be counted. Because you’re likely earning a higher salary now than you were when you started your career, working a few years longer can significantly increase your average – and your benefit amount.
2. Make sure you know all the benefits you’re entitled to
To truly maximize your checks, it’s important to understand exactly what types of benefits you’re eligible to receive.
For example, even if you haven’t worked long enough to be eligible to receive Social Security benefits, you may still be entitled to receive spousal benefits based on your husband’s or wife’s work record. Or if you can receive benefits based on your own record but your spouse is eligible to receive more, you might still be able to receive additional spousal benefits based on his or her record. Those who are divorced may also be able to receive divorced spousal benefits, even if your ex has remarried.
You may also be entitled to survivor benefits or divorced survivor benefits if your spouse or ex-spouse passes away. There are several qualifications you need to meet in order to be eligible to collect survivor benefits, but depending on how much your spouse was entitled to receive, that money could go a long way.
It’s crucial to do your research to determine which types of benefits you’re entitled to collect because the Social Security Administration won’t always inform you when you’re able to file for these benefits. So if you don’t know what you’re eligible for, you may miss out.
3. Apply for a do-over if you claim too early
In general, once you begin claiming your benefits, your decision is irreversible. However, you do get one do-over if you make a mistake. If you change your mind within 12 months of initially claiming benefits, you can reverse your decision – but you will need to pay back all the benefits you’ve already received.
This can sometimes be a smart move if you’ve claimed benefits early. For example, say you claimed at 62 because you lost your job and needed the extra income to survive. In that case, your monthly checks would be reduced (sometimes significantly) if you claimed before your FRA but felt you had no choice. However, if you find a new job six months later and decide you’d rather hold off on Social Security until after your FRA to earn that boost in benefits, you can undo your decision – as long as you withdraw your application within 12 months of filing and can repay the money you’ve already received.
If 12 months have already passed or you can’t afford to pay back what you’ve already received, there’s another option: voluntarily suspend your benefits. Once you reach your FRA, you can ask the Social Security Administration to suspend your benefits until 70. Then, once you turn 70 and start collecting benefits, you’ll receive extra money each month to make up for the time you weren’t receiving any benefits.
The advantage of suspending your benefits is that you’ll earn bigger checks and won’t have to pay back the benefits you’ve already received. But the downside is that the boost in benefits won’t be as significant as if you hadn’t yet started claiming at all.
Social Security benefits can help bridge the gap between the money you’ve saved and the money you’ll need to live comfortably in retirement. But to maximize the amount you receive, you’ll need to have a strategy. By learning as much as you can about how your benefits are determined and the type of benefits you’re eligible for, you can make the most of your monthly checks and stretch every dollar in retirement.
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