3 little-known tricks to maximize your Social Security benefits

Social Security payments are essential for millions of Americans, and maximizing those benefits is a priority for many, and for good reason. There are a number of strategies that many use to maximize their benefits, but distilling these tips into three consistent and long-lasting truths is a difficult task.

The thing is, the way Social Security benefits are calculated gives those entering or approaching retirement the opportunity to change course and move toward optimal retirement payments. These three tips are among the three that I think are the most useful for those at this stage of life because they really allow for excess income that can be the difference between being able to put food on the table and paying for key living expenses. healthcare and being forced out of the living situation or eating into one’s savings at too rapid a rate.

Without further ado, here are the top three tips I’ve come across that I believe may provide the most value to readers interested in maximizing their Social Security benefits in retirement.

Key points about this article:

• Maximizing your Social Security benefits can be the difference between being able to put food on the table and pay for key healthcare expenses and being forced out of the living situation or eating into one’s savings at too rapid a rate.
• Here are three of the best tips I’ve come across for those at this stage of life who want to do just that.
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Work for 35 years

The unfortunate reality that comes with collecting Social Security payments is that these distributions are calculated. Retirees are awarded monthly checks based on a number of factors, including how long they’ve been in the workforce and the highest earnings they’ve seen in 35 years of employment.

So as long as retirees can prove they worked for 35 years and maximized their earnings during that time (while waiting until full retirement age (FRA) to claim benefits), the coast should be free. Of course, this isn’t always possible for a number of reasons, but finding a way to get a few extra years of earnings (even at a lower rate) can substantially increase your SSA check in retirement.

Waiting until full retirement age (around age 67) can help, as claiming benefits earlier than that can result in monthly payments that are up to 30% less if claimed at age 62. Now, this is again one of those discretionary factors. Health and expectations of how long you will ultimately live play a role in the calculation. But for those in reasonable health, full retirement at the prescribed age is generally the way to go. No one knows how long they have to live, so preparing for a long and vibrant life is the best thing we can all do.

Combining both strategies—working at least 35 years and waiting until full retirement age—allows you to maximize your Social Security payments. If financially feasible, deferring beyond your FRA until age 70 increases your payout even more, ensuring you receive the largest possible benefit for the rest of your life. Careful planning in these areas can make a significant difference in your retirement income.

Delay in claiming benefits

Delaying Social Security benefits can be one of the most effective ways to maximize a payout over the long term. This goes back to my last point and really works in tandem with the 35 year work. Those who are able to do this and wait to receive distributions are usually better off in the long run. This article is aimed at readers who want to maximize their distribution, so we’re going to do just that.

Waiting until full retirement age will surprisingly give retirees the potential to earn the full retirement benefit that accrues to them. But importantly, deferring even longer (until age 70) can also lead to significant gains over time.

Monthly payments can increase by up to 8% (excluding cost of living increases over time) due to what are called ‘delayed pension credits’. These loans can accumulate a much higher benefit over time, up to 32% for another three years of waiting.

For many, this may be worth it with Social Security in mind payments are adjusted annually for inflation. Think about your personal situation and whether this might be worth it for you.

Spousal benefits

A retired couple on a porch bench

Maximizing social security spousal benefits it involves understanding the rules and strategically timing decisions. If you are married, you may be eligible to receive spousal benefits based on your spouse’s earnings record, even if you have never worked or have a low earnings history. Spousal benefits can be up to 50% of your spouse’s full retirement benefit.

To maximize spousal benefits, it is essential to coordinate your claim strategies. If you file for spousal benefits before you reach FRA, your benefits will be permanently reduced. Wait until FRA makes sure you are getting the full amount of your spousal benefit. Additionally, if your spouse delays claiming his own Social Security benefits beyond the FRA, his benefit increases, which can indirectly increase your spousal benefit if you claim later.

Another strategy is to consider “restricted application” if you were born before January 2, 1954. This allows you to claim only spousal benefits at FRA while delaying your own benefit to build up to the age of 70 years, maximizing the future payment.

As with other strategies, this option is case specific. Consequently, most retirees or those entering retirement may wish to speak with a financial advisor before making any decisions. These are just tips to consider and think about for those looking for the best possible long-term retirement.

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