U.S. Rep. Hank Johnson of Georgia has reportedly said: "Social Security is not just another government spending program. It is a promise from generation to generation."
The guy is right. Social Security isn't an arbitrary "entitlement" that the government hands out to retirees, either -- it represents money that those retirees are entitled to because they paid into the system for many years. Each generation pays into Social Security, and the next generation collects from it.
Here are some ways to ensure that you collect as much as possible from the vital program.
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1. Set up a "my Social Security" account
For starters, if you haven't already done so, go to the Social Security website and set up a "my Social Security" account. Once you do, you'll be able to access a lot of information related to your future benefits. You'll see the Social Security Administration's (SSA's) record of your earnings by year -- which can allow you to spot any errors and then have them fixed. You'll also be able to see estimates of how much you may collect in the future, depending on various factors.
All of us should set up such an account, because some scammers out there are setting up accounts for people who haven't done so yet, and that can cause headaches and hassles. Set up your account -- and then check in on it every now and then. The more informed you are about how much you can expect to receive, the better financial planning decisions you can make.
2. Work for 35 years -- or more
Next, it's important to work for at least 35 years, if you can. If you work from, say, age 25 to 55 and then retire, that will be only 30 years of work. The SSA's formula for determining your benefits averages your inflation-adjusted earnings from the 35 years in which you earned the most. So working only 30 years will mean that the formula inserts five zeroes.
Aim to work for at least 35 years -- and if you're earning significantly more than you have in the past, on an inflation-adjusted basis, consider working a few more years -- because each high-earning year will kick out your lowest-earning year, boosting your average earnings.
3. Earn as much as you can
This strategy is rather obvious: Earn as much as you can. You might be comfortable at your current job, with no thoughts of moving on or moving up, but that can leave you with smaller Social Security benefit checks.
The more you earn, up to a point, the greater your benefits will be. That point is the wage cap, which is $160,200 for 2023 and which tends to be increased each year. Earning more than that can deliver more money for your retirement accounts, but it won't boost your benefits.
4. Start collecting your benefits at the best time
One of the most effective ways to beef up your benefits is to start collecting them at an optimal time. You can start as early as age 62 and as late as age 70 -- though the "full retirement age" at which we can start collecting our full benefits is 66 or 67 for most of us. Start early, and your benefit checks will be smaller, and if you start late, they will get bigger.
There's no one-size-fits-all best time to start collecting. If you stand a decent chance of living a shorter-than-average life or you simply need that income soon, starting early makes good sense. If you stand a decent chance of living a longer-than-average life and you're able to delay starting to collect, that's a powerful strategy. For one thing, each annual cost-of-living adjustment you receive will be a percentage of a bigger benefit.
Remember, too, that while starting early gets you smaller checks, you'll get many more of them than will someone who starts at age 70. Starting early isn't necessarily a dumb move.
5. Consider delaying your divorce
Finally, here's a strategy that may sound weird, and will only apply to a relatively small group of people: If you're planning to divorce, and you can be flexible about when you do so, you might want to delay. That's because if you've been married for 10 years and you've been the lower earner in your marriage, you may be able to claim benefits based on your ex-spouse's earnings instead of your own.
Don't settle for whatever the Social Security Administration sends your way when you retire. Learn more about Social Security so that you can make savvy decisions regarding it and get as much as you can out of the program.
