If you want a higher Social Security payment, there are things that you can do to get it. In fact, depending on your age and retirement plans, it may be possible to increase the benefits you receive by hundreds of dollars per month.
If you aren't sure what to do to maximize your Social Security income, you're in luck, as this guide can help. You just need to take three simple steps in order to make that happen. Here's what they are.
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1. Raise your average wage
Your standard Social Security benefit is based solely on one factor: Your average wage in the 35 years your earnings were the highest over the course of your career (after adjusting for wage growth over time). You will get a percentage of this average wage as a senior.
This means the best way to boost your retirement checks is to increase your average earnings in the years included in your benefits calculation.
You can do this by trying to earn as much as possible over your career. And, if you succeed in increasing your income over time, you can also raise your average wage by working longer than 35 years. Each extra year you work at a higher salary will replace one of your earlier years of low earnings when benefits are calculated. This will bring up your overall average.
2. Wait to claim your Social Security checks as long as possible
As mentioned above, your average wage determines your standard Social Security benefit. But you won't necessarily get your standard benefit since the age at which you get your first check will also affect the amount of your retirement income.
Your standard benefit is available at a designated full retirement age (FRA) that is based on your birth year. Your FRA is between 66 and six months and age 67 for everyone born in 1957 or later. Early-filing penalties reduce your standard benefit if you claim it between age 62 (the earliest age of eligibility) and your FRA. Delayed retirement credits increase your benefit if you claim it between FRA and 70 (the latest age at which you can earn these credits).
If your primary goal is to get the largest monthly Social Security check, delaying as long as possible until 70 is the way to go.
3. Minimize taxes on your Social Security benefits
The amount of your Social Security payout you actually get to keep is going to depend on whether you're subject to taxes on your benefits or not.
You will owe federal taxes if countable income (half of Social Security plus all taxable and some non-taxable income) is above $25,000 for single tax filers or $32,000 for married joint filers. But you can avoid owing these taxes if you invest in Roth retirement accounts since distributions from them are not countable.
A minority of states also tax Social Security benefits in at least some circumstances. So if you want to keep more of your Social Security money, either avoid retiring to one of these locations or make sure their tax rules won't render your benefits taxable.
By following these three steps, you can bring home the maximum possible amount of Social Security benefits. Since these benefits are an important source of funds for many seniors, it's worth making the effort.
