5 Secrets to a Bigger Social Security Check

Social security is the backbone of many Americans’ retirement budgets. The government program provides at least 50% of household income for about half of people age 65 and older, according to Social Security Administration data. So getting a bigger Social Security check can have a huge impact on the quality of your life after retirement.

The key to greater control is an understanding of how the rules work. Unfortunately, the complexities of Social Security are too great for many Americans many hold false beliefs about how the system works. But knowing these five secrets could ultimately help you get a bigger Social Security check.

1. Working for at least 35 years

The easiest way to increase your Social Security benefits is to make sure you work for at least 35 years. Your monthly benefit is based on your average monthly income (adjusted for wage inflation) over 35 years. If you have worked less than 35 years, the Social Security Administration will fill in the missing years with $0 earned. Replacing that $0 with income from a job or even just a few thousand dollars from a side job could result in a nice increase in your benefits for the rest of your life.

One thing you should be aware of if you are already receiving benefits is the Income test for social security. The merit test applies to anyone who has not yet achieved this full retirement age. If you earn above a certain threshold, the Social Security Administration will withhold some of your current benefits. In other words, you’ll see your monthly check decrease. But don’t worry. The SSA will adjust your benefit higher when you reach full retirement age to offset the amount withheld.

2. Work well into your 60s

The Social Security Administration adjusts your wages every year beginning in your 20s and 30s for an increase in living standards. But those adjustments stop when you turn 60.

Most people who continue their careers into their 60s earn more than they did in their 20s and 30s, even after adjusting for inflation. But even if your inflation-adjusted earnings haven’t increased, continuing to work into your 60s will eventually replace the early earning years in which the SSA calculates your 35 highest-earning years. This will give you a larger benefit check.

3. Suspend your benefits

If you have reached full retirement age but are not yet 70 years old, you have the option to suspend your benefits. When you suspend your benefits, you start accruing deferred pension credits. These add 2/3 percentage points to your check for each month you keep your benefits suspended. Benefits resume automatically at age 70. That’s possible increase your benefit to 26.7% depending on when you were born.

This may be a good option for someone who retired early but has returned to work or has seen their investments perform well. If you don’t have an immediate need for supplemental income, it may make sense to suspend benefits today in exchange for a larger Social Security check later.

4. Pay attention to taxes

The IRS uses a metric called combined income to determine what portion (if any) of your Social Security income is taxable. Your combined income is equal to half of your Social Security benefits plus your own income adjusted gross income plus any non-taxable interest income. If your combined income exceeds certain thresholds, a percentage of the amount exceeding this threshold becomes taxable. Here are the thresholds.

Data source: Social Security Administration.

If you can keep your combined income below the key thresholds, you can keep a larger share of your Social Security check.

5. Be smart when it comes to survivor benefits

Survivor benefits can be claimed as early as age 60, but claiming benefits as soon as possible may not be the smartest decision.

Widows and widowers have the favorable option of claiming their survivor’s benefit and personal benefit at different times. Spouses with living partners must file for both personal and marital benefits at the same time. The ability to claim at different times means that you should claim one of these benefits as soon as possible and the other as late as necessary to receive the maximum.

For example, if your full survivor benefit is $1,500 per month and your full personal benefit is $1,000 per month, it probably makes sense to wait until age 62 to claim your personal benefit and switch to your survivor benefit when it reaches age 67. is. The opposite could also be true, causing you to claim survivor’s benefits at age 60 and wait until age 70 before switching to your personal benefit.

If you manage your Social Security options properly, you can get significantly higher lifetime benefits.