Having a handle on how the Social Security system works can serve you well throughout your career and set you up for a more comfortable retirement. Perhaps more importantly, knowing exactly how to increase your monthly check is key.
Below you'll find five ways to score a richer Social Security payout when it comes time to file for benefits.
1. Be fully insured
First, you'll need to guarantee that you'll receive Social Security benefits in the first place. This means that you'll need to have worked at least 10 years and earned 40 credits to ensure you'll receive a monthly check in retirement (four credits may be earned per year).
There isn't a requirement that the credits be earned consecutively or that you earn all four credits in a given year. However, you will need to have earned at least 40 credits by the time you file your claim for benefits.
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2. Earn more
Social Security benefits are calculated based on your cumulative earnings history, with more credit given to those who earn at least the maximum taxable wage base every year. In 2023, that amount is $160,200 -- a sharp increase from last year. Any amount earned over $160,200 won't help increase your monthly Social Security check, but any increases below that threshold will make your monthly payout higher.
As an example, someone receiving a 15% raise from $100,000 to $115,000 would pay more in Social Security tax and therefore be eligible for a higher monthly check in retirement.
3. Work longer
As mentioned before, your primary insurance amount (PIA), or projected monthly benefit, is based on your cumulative work history. More specifically, it's based on your 35 highest-earning years. If you took time off to attend graduate school or care for a loved one, you might have low- or no-income years baked into your Social Security calculation.
An antidote to this is to work for a few more years to ensure you have at least 35 years of reasonable earnings. This will also mean you have 35 years of reasonable Social Security tax payments, which can help boost the amount you'll receive as a steady stream in retirement.
4. Delay your claim
Waiting until age 70 to collect benefits is probably the simplest -- albeit not the easiest -- way to increase your monthly check amount. People who wait until age 70 collect delayed retirement credits, which, in essence, have the ability to increase your monthly checks by 30%, as compared to what you would have received at Full Retirement Age (FRA).
While waiting to collect benefits sounds simple, a variety of factors may influence your decision to apply for benefits sooner, including your health and the status of your personal savings.
5. Look into spousal benefits
Assuming the higher-earning spouse is already collecting benefits, the lower earner may be eligible for spousal benefits. These amount to 50% of the primary earner's benefits. The lower-earning spouse is eligible to collect based on their own earnings record or 50% of the primary earner's benefits, whichever is higher.
Depending on your family dynamic, it's worth exploring the strategy that maximizes total dollars received, regardless of who the primary earner was.
Develop a strategy that works for you
Since no two lives and corresponding family circumstances look the same, strategies around Social Security are destined to look different. However, earning more, working longer, and delaying your claim for benefits will generally help you lock in a higher monthly payout in retirement.
Regardless of your decisions around Social Security, be sure to account for factors both financial and non-financial, and proceed with your choices confidently.
