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8 Ways to increase Social Security Benefits

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8 Ways to Enhance Social Security Benefits

The delay of your start date is a way to guarantee the best monthly reward, but there are other options worth looking into.

by Liz Weston, CFP(r) Senior Writer | Personal finance economics, credit scores, and personal finance Liz Weston, CFP(r) is a personal finance columnist host of”Smart Money,” co-host of the “Smart money” podcast an award-winning journalist, and the creator of five novels about financial matters, among them the best-selling “Your credit score.” Liz has appeared on numerous national radio and television shows, including the “Today” show “NBC Nightly News,” The “Dr. Phil” show and “All things considered.” Her columns are carried in the media by The Associated Press and appear in a variety of media outlets every week. Prior to NerdWallet, she wrote articles for MSN, Reuters, AARP The Magazine and the Los Angeles Times. She shares a home in Los Angeles with a husband along with a daughter and a golden retriever who is a co-dependent.

Dec 21, 2022

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Finding ways to increase Social Security benefits is important because those checks will likely be a major source of your income in retirement.

Unfortunately, many people don’t understand how Social Security really works. They claim too early, miss out on important benefits and do not make use of strategies that can boost their income over the course of their lives. Their mistakes can cost them as much as $250,000, researchers have estimated.

These are the eight methods you can increase you Social Security benefits.

In this article, and Show More

1. Delay your application

Social Security retirement benefits rise by roughly 5to 7 percent every year that you are delayed between the age at which you can claim the first benefit at 62 years old and your full retirement age, which is currently 66 and 2 months and increasing to 67 for those born between 1960 and.

The return you get will increase if you are able to wait beyond your retirement age. boost your check by 8% for every year that you delay applying until you reach age 70, at which point your benefits are at their maximum.

A tip for the average person: You are better off delaying in accordance with a huge amount of research taking into consideration longer lives, prevailing rates of interest and survivors’ benefits. Many financial planners encourage their clients to tap other resources, such as retirement savings, if it allows them to put off applying.

2. Work longer

Social Security benefits are based on a worker’s 35 highest-earning years. You could be eligible to boost your benefit by working for longer hours if you earn enough to substitute one of your less-paid years with one that is more lucrative.

People who were able to take time off to help raise children or had other breaks in their employment might find that working for longer hours to be especially helpful in increasing their benefits. (Note it is important to note that should you start Social Security early, continuing to work can temporarily cut your benefit.) Also, a woman’s income is higher than that of a male later in life, increasing the chance of earning money from continuing to work.

Pro Tip: If you apply for Social Security early, your benefits will be cut by one dollar for every $2 you earn over the limit. This is $21,240 in 2023. This earnings test disappears at the time you reach your full retirement age and it’s generally best to wait at least until the time you reach that age to apply.

3. Earn more

Another way to increase the amount of your next Social Security check is to max out your earnings as many years as you are able to. “Maxing out” in 2023 means that you’ve made $160,200 or more which is the maximum amount of income subject to the 6.2 percent Social Security payroll tax. If you’ve maxed out throughout your 35 most lucrative years, you’ll be eligible for the highest Social Security benefit at your full retirement age. This is $3,627 per month for 2023.

A tip for self-employed workers will seek to reduce the portion of their earnings that is subject to payroll taxes However, this tactic could be a problem when it’s time to file to Social Security. Paying a bit more taxes in the short run can pay off in the form of an ongoing stream of more, inflation-adjusted income.

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4. Consider your spouse

Certain spouses with lower earnings could benefit more benefit from a spousal benefit than from taking their own retirement benefit. Spousal benefits may be as much as 50 percent of what the highest earner gets at his or the complete retirement. The amount is discounted if started early. Typically the higher-earning spouse needs to be receiving a retirement benefit for the other partner to get a spousal benefit. In the past, people with higher incomes were able to “file and then suspend” to allow their benefits to grow but it’s not an option.

When you submit your application, Social Security will compare your spousal benefit to your retirement benefits and award you the greater of both. In the majority of cases it is not possible to change from a spousal benefit to your own benefits later on even if your benefit is higher. (People born before the date of. 2, 1954, have the option of submitting an “restricted application” for spousal benefits only, and then changing to their own benefits later.)

Couples should also think about survivor benefits in making Social Security decisions. When one spouse dies, the survivor will start getting only one check, which is the largest of the two checks that the couple received. The decrease in income resulting from the check that’s lost can be significant. Couples can help mitigate the harm by making sure that the amount of the check remaining is as large as is possible. That typically requires having the higher earner put off the beginning of Social Security, preferably for at least a few years until full retirement age.

A tip for you: Coordinating benefits with your spouse can be a challenge. Consider using the Social Security claiming calculator to look into the options. There’s a free one at the AARP website, or you can buy more sophisticated versions at Social Security Solutions ($20 and up) or Maximize My Social Security ($39 and up).

5. Investigate divorced spouse benefits

If you’re unmarried and your previous marriage was for at least 10 years, then you might be eligible for spousal benefit based on your ex’s work record. The amount can be up to 50 percent of the employee’s benefits at his or her complete retirement. If you remarry, however the divorced spouse benefit is canceled. You must be at or above 62 to get spouse benefits.

If your ex-partner died and your marriage lasted at minimum 10 years, you could qualify for survivor benefits that can be as high as 100% of the ex’s benefit. You can remarry at 60 or over (or 50 or more if disabled) and still be eligible for divorced survivor benefits. Survivor and divorced survivor benefits can begin at age 60, or at age 50 if the survivor’s disabled or is disabled, or at any time if you’re caring for the child of your ex-partner who is younger than 16 or has disabilities (and in that situation, the 10-year marriage requirement is not required). Survivors can switch to their own benefit later if that’s larger, and vice versa.

Pro tip: Your ex must be at least 62 for you to qualify for divorced spousal benefit. However, the spouse does not need to be receiving his or his own benefits. (That’s distinct in spousal benefits for regular spouses, which usually require the primary worker to apply before spouses can be eligible for benefits.) The benefits for survivors are based on what your ex was receiving or could have received at full retirement age. (If you and your spouse delayed the start of benefits past full retirement age, your survivor’s benefit will be enhanced by the delay retirement credit.) If you begin receiving benefits prior to the age of full retirement however, the amount you get will be cut in half.

6. Add your minor child

If you’re currently receiving Social Security retirement or disability benefits, your child could be entitled to a check as well. A minor who is not married can get up to 50% of the primary worker’s retirement or disability benefits. This child benefit typically ends at 18, but can extend to age 19 if the child is still in high school. Children benefits may also be offered to those 18 and older if they are disabled and the disability began before turning 22.

There is an “family maximum” that limits how much families can earn on the basis of one worker’s earnings record. The maximum is between 150% and 188% of the worker’s monthly benefit at full retirement age. If your family’s total benefits would exceed the cap the worker will continue to receive an unreduced check however the checks for dependents would be proportionately reduced.

Pro tip: Family benefits, including child and spousal benefits, will be evaluated by Social Security’s earning tests and can be reduced or eliminated if the primary worker starts benefits early however, they continue to work.

7. Suspend your benefit

If you began Social Security early and decided that was a mistake, you may be able to stop receiving your benefits when you reach . This will enable your benefit to be credited with credits for delayed retirement that will increase the amount you receive by 8% each year until you reach 70, when your benefit reaches its maximum. You don’t have to repay the benefits you’ve received.

In addition, if you stop your benefits, it does not affect the benefits of those who are receiving checks based on your work record, for example, a spouse or a minor child. The possible increase in your earnings may not make up for the loss of your dependents’ benefits.

Pro tip: Sometimes Social Security workers incorrectly tell people that they are not able to take benefits off. If that is the case, refer them to this page on the site.

8. Make a second attempt

If you decide to change your mind within a year after applying in the year following your application for Social Security, you can withdraw your application and pay back the amount you’ve received in benefits. That will restart the clock on your benefits so you can receive the 7% to an 8% increase each year by delaying your application. You are only able to do this once throughout your life You can’t revoke your application within 12 months.

Pro tip: Withdrawing your application is different from suspending your benefits. You may suspend your benefits orally or in writing anytime after you reach the full retirement age. In order to withdraw, you must fill out Social Security Form SSA-521 within a year after applying and pay an amount equal to all the benefits you and your family members have received, including any Medicare premiums deducted from your paychecks.

The author’s bio: Liz Weston is a columnist for NerdWallet. She is a certified financial planner and author of five money books, including “Your Rating Score.”

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