Without Social Security benefits, 22 million Americans would be poor — per a report from the Center on Budget and Policy Priorities. About 21 percent of married elderly beneficiaries and 44 percent of unmarried ones get fully 90 percent or more of their income from Social Security, while about 48 percent of married elderly beneficiaries and 69 percent of unmarried ones get 50 percent or more of from it, according to the Social Security Administration.
How much money are we talking about? Well, the average Social Security retirement check was recently $1,417, or about $17,000 annually. If that doesn’t seem like much, know that there are ways to increase your benefits. Here are 10 strategies to consider:
- Check your record
- Work for at least 35 years
- Earn more
- Delay starting to collect your benefits
- Start collecting early, at 62
- Collect a spousal benefit
- Don’t earn too much if you’re working in retirement
- Delay your divorce
- Look into survivor and disability benefits
Let’s examine each in more detail.
No. 1: Check your record
You can get a good estimate of how much income you can expect to receive from Social Security by setting up a my Social Security account with the Social Security Administration (SSA). Doing so will let you see the SSA’s record of your earnings, which you should revisit now and then, to make sure they’re correct. If they’re not, you might end up receiving smaller benefit checks than you’ve actually earned. Fixing errors in your record can be an effective way to increase your benefits.
No. 2: Work for at least 35 years
Many people don’t realize this, but the formula that the SSA uses to compute your benefits is based on your earnings in the 35 years in which you earned the most, adjusted for inflation. If you only earned income in 30 years, the formula will be incorporating five zeros, which will shrink your benefits. Aim to work for at least 35 years, if you can.
No. 3: Earn more
Since the formula focuses on your 35 highest-earning years, another way to increase your benefits is to have higher earnings. Even if you already have worked 35 years, you may be able to increase your future benefit checks by working for a few more years — if you’re earning significantly more than you did in the past (adjusted for inflation). Each additional high-earning year will kick the lowest-earning year out of the calculation, boosting your benefits.
No. 4: Delay starting to collect your benefits
Another way to increase your Social Security benefits is to delay starting to collect them. You can start as early as age 62 and delay up to age 70. Each of us has a “full” retirement age (typically 66 or 67 these days), and for every year beyond that that you delay, your benefits will grow by about 8%. Delay from age 67 to 70 and you’ll get benefits 24 percent bigger. The table below shows the effect of starting to collect early (resulting in smaller checks) or late. For example, if your full retirement age is 67 and you start collecting benefits at 64, your checks will be 80 percent of what they would have been had you started collecting at 67.
No. 5: Start collecting early, at 62
If you live an average life span, though, you won’t come out ahead much by delaying, because you’ll get fewer checks, in total, than those who started earlier with smaller checks. If you live much longer than average, though, waiting will have been worth it. But if you have reason to believe you will live a shorter-than-average life, or you simply need the money, go ahead and start collecting early. For most people, that’s a perfectly reasonable thing to do.
No. 6: Collect a spousal benefit
If you’re married and your spouse has a richer work history than you do, you may be able to collect a “spousal benefit,” based on your spouse’s earnings instead of your own. Spouses can collect benefits worth up to 50 percent of their other half’s benefits. This can be particularly welcome for spouses who never worked or earned very little.
No. 7: Don’t earn too much if you’re working in retirement
If you’re planning to start collecting benefits before your full retirement age and you want to work some then, too, be careful, because your benefits may be reduced. The Social Security Administration explains: “If you’re younger than full retirement age during all of 2018, we must deduct $1 from your benefits for each $2 you earn above $17,040.” The year you reach your full retirement age, the earning limit jumps to $45,360, and the penalty decreases to $1 withheld for every $3 earned above the limit. Any money withheld isn’t lost, though. It’s factored into the benefit checks you receive later, which end up increased.
No. 8: Delay your divorce
This won’t work for everyone, but if you have been married for less than a decade and are planning to divorce, and if you are able to delay that divorce, doing so may serve you well. Divorcees may be able to claim benefits based on their ex-spouse’s earnings — even if that ex has remarried — if they were married for at least 10 years. If your future ex-spouse has a significantly stronger earnings record than you do, you may be able to collect a much bigger monthly benefit check based on his or her earnings than the one based on your own record. There are a few more rules related to this, so look into them if this might apply to you.
No. 9: Look into survivor and disability benefits
You may be able to get more money from Social Security than you thought — if you’ve been widowed or are disabled or related closely to someone disabled. That’s because Social Security offers survivor and disability benefits — and even retirement benefits for dependents of retirees in some cases. If your spouse passes away, you may be able to claim survivor benefits — and your children may receive them, too, through age 17. Social Security offers disability benefits, too, to people of all ages who qualify.
No. 10: Strategize
Finally, know that there are lots of other strategies related to Social Security that you may be able to employ — especially if you’re married. For example, you and your spouse might start collecting the benefits of the spouse with the lower lifetime earnings record on time or early, while delaying starting to collect the benefits of the higher-earning spouse. That way, you’ll both enjoy some income earlier, and when the higher earner hits 70, they can start collecting extra-large checks. Also, should that higher-earning spouse die first, the spouse with the smaller earnings history can collect those bigger benefit checks as their own.
Consider consulting a professional financial advisor, too, as a good one might help you better strategize about Social Security, with your gains more than offsetting the cost of the advisor. Favor fee-only financial advisors, whom you can find via referrals from friends or at the website of the National Association of Personal Financial Advisors.
If you’re able to use some of the ideas above to boost your monthly benefit checks by just $500, you’ll gain an extra $6,000 over a year — and $60,000 over a decade. Even greater gains may be possible, too.