3 Strategies to Maximize Social Security Benefits

maximize social security benefits

When it comes to planning for retirement, you must consider ways to maximize Social Security benefits.

The reason is simple.

You are going to need all the Social Security benefits you can get.

According to the Social Security Administration, “In 2021, an average of 65 million Americans per month will receive a Social Security benefit, totaling over one trillion dollars in benefits paid during the year.”

A significant number of these people are almost fully dependent on their Social Security benefits.

The Center on Budget and Policy Priorities reports, “For about half of seniors, it provides at least 50 percent of their income, and for about 1 in 4 seniors, it provides at least 90 percent of income.”

Many experts suggest you need to bring in approximately 80% of your pre-retirement income to settle nicely into your retirement years, but your Social Security benefits may not reach 80% of your pre-retirement income.

Specifically, if you plan to be like 1 in 4 seniors who depend on Social Security benefits for at least 90% of income, you may discover it simply isn’t enough. 

Take, for example, the recent increase in Social Security benefits.

In the biggest increase in benefits since 1982, Social Security recipients will receive a 5.9% increase in COLA (cost of living adjustment).

[Related Read: 3 Critical Changes to Social Security in 2022]

In 2021, the average retired worker in the U.S. earned $1,565 each month in benefits. After the 5.9% adjustment, the average retired worker will earn $1,657 a month.

Is $1,657 a month approximately 80% of your pre-retirement monthly paycheck? Is it enough to make up a hefty chunk of your income? 

If not, then you will need to maximize Social Security benefits as well as look at other investment opportunities for retirement. 

Some people just accept that they will receive Social Security benefits one day, but they don’t actually do any planning to make sure they maximize Social Security benefits.

If you want to receive the best Social Security benefits, you need to be intentional about when and how you choose to collect benefits. 

Watch How to Increase Your Social Security Benefits [3 Easy Steps].

#1 Work 35 Years

One way to maximize Social Security benefits is to earn income for 35 years.

The Social Security Administration explains, “The age you stop working can affect the amount of your Social Security retirement benefits. We base your retirement benefit on your highest 35 years of earnings and the age you start receiving benefits.”

Your individual Social Security benefits are based on your lifetime earnings. 

Your actual earnings are adjusted or indexed to account for changes in average wages since the year the earnings were received. 

Then, the Social Security Administration (SSA) calculates your average indexed monthly earnings during the 35 years in which you earned the most.

To put it differently – SSA will use your highest 35 years of earnings to calculate your benefits. This even includes years when you did not work.

This means that if you claim Social Security benefits without having 35 years of earnings, SSA will credit you with no income for each year up to year 35. 

It’s also wise to use the Social Security Quick Calculator to play around with the numbers to see the difference in monthly benefit amounts according to when you start collecting.

If you discover you need to bring in more benefits, a quick way to maximize benefits is to replace those zero (no income) years with actual earnings. 

Additionally, you can replace the smaller earning years with larger earnings. 

This is why it may be a good idea to pick up extra hours at work or take on a side hustle to maximize your Social Security benefits for life. 

However, it is important to understand that if you start drawing benefits and continue to work, you may be penalized if you earn too much.

[Related Read: Working While Collecting Social Security Benefits – Avoid This Costly Mistake]

#2 Delay Claiming Your Social Security Benefits

In addition to waiting until you have 35 years of earnings before claiming benefits, it is also wise to delay claiming your Social Security benefits.

According to the Social Security Administration, “Social Security retirement benefits are increased by a certain percentage for each month you delay starting your benefits beyond full retirement age. The benefit increase stops when you reach age 70.”

You can begin as early as age 62 or 60 for widow or survivor benefits. 

Each month you wait to claim Social Security, you increase your benefits by an extra 2/3 of 1%. It adds up quickly!

Again, play around with the Social Security Quick Calculator to see the approximate benefit amounts you may collect at certain ages. You’ll see there is a pretty big jump between age 62 and age 70. 

By waiting until Full Retirement Age, you could receive around 30% more in monthly benefits for the rest of your life.

With that being said, there are times when it is beneficial to take benefits early

The key is to make intentional choices with your financial future in mind.

#3 Collect Spousal Benefits

Another way to maximize Social Security if you are married is to collect spousal benefits.

According to the Social Security Administration, “When a worker files for retirement benefits, the worker’s spouse may be eligible for a benefit based on the worker’s earnings. […] The spousal benefit can be as much as half of the worker’sprimary insurance amount,’ depending on the spouse’s age at retirement.”

This means that, if you make less than your spouse during your working years, you can claim up to 50% of your spouse’s Social Security benefits at retirement. 

If your benefits are still higher than 50% of your spouse’s, you will naturally take your own benefits.

Check Out These Simple Social Security Maximization Strategies.

Social Security Strategies for Specific Situations

In addition to the three steps above, there are certain things to do for specific situations (depending on your marital status). 

Let’s look at four different scenarios to determine which additional measures you need to use to maximize Social Security benefits.

For Singles

The best way to maximize Social Security benefits is to delay collecting them. The longer you wait to claim, the higher your benefits. You can claim as early as 62, but for reduced benefits.

At full retirement age (click here to determine your FRA), you will receive your full benefits.

By waiting to age 70, you will increase your benefits by roughly 32%, or 8% per year after full retirement age.

For Married Couples

Those who have been married for at least 10 consecutive years can claim either their own benefits based on their earnings – or half of the spouse’s benefits, whichever is higher once they reach full retirement age.

For Divorcees

You can claim Social Security benefits from your ex-spouse if you were married for more than 10 years consecutively.

This amount could be as much as 50% of their benefits. This does not affect your ex’s benefits, nor will they know you have filed.

For Widows

Survivor benefits are based on the earnings of the person who died.

The widow can receive full benefits at their full retirement age or any age if they take care of your children who are younger than age 16 or disabled.

People can claim reduced survivor benefits at age 60.

Additionally, people who remarry age 60 or later can collect survivor benefits from an ex if that former spouse is deceased.

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