Social Security is often portrayed as an example of big government -- and even sometimes as a kind of welfare payment. It absolutely isn't, though, because if you're receiving Social Security benefits, it's because you or a family member paid into the system. It's money that you deserve and were promised.
If you don't make some smart moves along the way, though, you might end up receiving less from Social Security than you otherwise could have. Here are three strategies to help you beef up your benefits.
Image source: Getty Images.
1. Maximize your benefits
First off, know that there are various rules determining how much you receive in benefits. For starters, to be eligible at all, you'll need to have earned 40 "credits" -- which are currently valued at $1,510 and will be $1,640 for 2023. That's a fairly low hurdle, and because you can earn a maximum of four credits per year, it means that most people will qualify after working just 10 years -- if they earned enough to get those four credits ($6,040 this year) each year over 10 years.
If you only work 10 years, though, your benefits will be meager. The Social Security Administration has records of your earnings throughout your career, and of how much you paid into the system. The formula it uses to calculate your benefits is based on your (inflation-adjusted) earnings in the 35 years in which you earned the most. So if you only work, say, 20 years, it will be factoring in 15 years' worth of $0s.
Ideally, work at least 35 years. And earn as much as you can, too. The average monthly Social Security retirement benefit was recently $1,674 -- or about $20,000 per year. If your earnings were below average, you'd be receiving less than that amount.
You might increase your earnings by getting a higher-paying job (or career!) or by taking on a side job or two. Once you've worked 35 years, it's also a smart strategic move to work a few more years if you're earning significantly more now (on an inflation-adjusted basis) than before. If so, each high-earning year will kick out a low-earning one from the calculation.
2. Delay starting to collect your benefits
Next, consider delaying starting to collect your benefits. You can start as early as age 62 (and for some people starting at 62 or soon after is a smart move) -- you'll collect smaller checks, but more of them than if you wait. Somewhere between age 66 and 67, you'll reach your full retirement age, at which point you'll be eligible to collect the full benefits to which you're entitled. Delay beyond that point, and you'll fatten your benefits up by about 8% for each year that you delay, until age 70.
The table below shows how much of your full benefits you can expect to collect, depending on when you turn on the spigot:
|
Start Collecting at: |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Data source: Social Security Administration.
3. Coordinate with your spouse
Finally, if you're married, you might maximize how much you get out of Social Security by coordinating your plans. For example, if one of you has had considerably higher earnings, the higher earner may try to delay starting to collect as long as possible, to maximize those benefit checks. Then, when one of you passes away, the survivor, who gets to collect whichever of the two spouses' benefits is larger, will get benefit checks that are bigger than they otherwise would have been.
Social Security is likely to play a more important part in your future financial security than you may expect, so take some time to learn more about it -- so that you'll be well-equipped to make savvy decisions.
