As you look toward retirement, you’ll want to know what to expect in terms of income and benefits. The amount of your Social Security payments depends on a variety of factors, including your earnings history and the age you sign up for benefits. You may be able to boost your monthly checks by following certain strategies as you plan for retirement.
Some ways to increase your Social Security payments include:
— Work at least 35 years.
— Earn more if possible.
— Work until full retirement age.
— Delay claiming until age 70.
— Claim spousal payments.
— Include family.
— Know retirement earning limits.
— Minimize Social Security taxes.
— Maximize survivor’s benefits.
— Check your records.
Work at Least 35 Years
Social Security benefits are calculated based on the 35 years in which you earn the most. If you don’t work for at least 35 years, zeros are factored into the calculation, which decreases your payout. However, if you work for more than 35 years, a higher-earning year will cancel out a lower-earning year in the Social Security income calculation. “Replacing zero-income years or low-income years on your earnings history can give your Social Security retirement benefit a boost,” says Leah Woodly, associate financial advisor at Dorval & Chorne Financial Advisors in Maple Grove, Minnesota.
[Read: What Is the Maximum Possible Social Security Benefit?]
Earn More if Possible
Upping your income by asking for a raise or earning income from a side job will increase the amount you receive from Social Security in retirement.
“Having retirement income more heavily weighted in Social Security can effectively help insure against risks such as longevity, market volatility, inflation and taxes,” says Mario Ruiz, a retirement income specialist and wealth manager at Regal Financial Group in Austin, Texas.
There is a maximum amount of earnings subject to the Social Security tax and used to calculate Social Security retirement benefits. This amount is adjusted for inflation each year. Earnings of up to $160,200 in 2023 are used to calculate your retirement payments.
Earnings above $160,200 in 2023 are not taxed by Social Security and will not be factored into your future Social Security payments in retirement.
Work Until Full Retirement Age
You can start collecting Social Security payments as early as age 62, but you will receive smaller monthly payments unless you wait until your full retirement age to sign up for Social Security.
The full retirement age is 66 for those born between 1943 and 1954. The full retirement age then gradually increases in two-month increments from 66 and two months for those born in 1955 to 66 and 10 months among those with the birth year of 1959.
Age 67 is the full retirement age for everyone born in 1960 or later. “You take a permanent deduction if you claim before full retirement age,” Woodly says.
Delay Claiming Until Age 70
If you don’t need the funds right away, you can wait to claim Social Security. “Postponing Social Security beyond your full retirement age can result in higher monthly benefits,” says Sterling Neblett, a founding partner of Centurion Wealth Management LLC in McLean, Virginia.
Payments will increase by about 8% for each year up to age 70. After that, there is no additional benefit for waiting to sign up for Social Security. For example, if you are eligible for $1,000 per month in Social Security payments at your full retirement age of 67, you could increase your Social Security benefit to $1,240 per month by waiting until age 70 to start your Social Security payments. These higher payments last for the rest of your life and are also adjusted for inflation each year.
[READ: How to Delay Claiming Social Security Until Age 70]
Claim Spousal Payments
If you’re married, you can take steps to maximize your Social Security payments as a couple.
Spouses may claim benefits based on their own work record or up to 50% of the higher earner’s benefit, whichever is higher. The lower-earning or nonworking spouse needs to sign up for spousal payments at his or her full retirement age to get a 50% spousal payment. The spousal payment percentage is reduced for those who start benefits before full retirement age. If you were married for at least 10 years, you may also be able to claim Social Security benefits based on an ex-spouse’s work record.
Include Family
If you qualify for Social Security retirement or disability benefits and have dependent children under age 19, such as a biological child, stepchild or adopted child, you may be able to secure additional Social Security payments for them. Those are worth up to one-half of your full retirement benefit to certain annual limits.
Qualifying children generally must be under age 18 and unmarried, full-time high school students up to age 19 or severely disabled before age 22. A spouse who is caring for a dependent child under age 16 may qualify for additional payments. However, there is a limit on how much family members can receive that is generally 150% to 180% of the parent’s full benefit amount.
Know Retirement Earning Limits
If you sign up for Social Security before your full retirement age and continue to work, part of your Social Security benefit could be temporarily withheld.
Social Security beneficiaries under full retirement age who earn more than $21,240 in 2023 will have $1 withheld for every $2 they earn above the limit. The year you turn your full retirement age, the earnings limit jumps to $56,520 and the penalty decreases to $1 withheld for every $3 earned above the limit.
Once you turn your full retirement age, you can work and collect Social Security payments at the same time without penalty, and your Social Security benefit will be recalculated to give you credit for any benefit payments that were withheld in the past and your continued earnings.
Minimize Social Security Taxes
You might have to pay taxes on part of your Social Security income in retirement. If the sum of your adjusted gross income, nontaxable interest and half of your Social Security benefit is more than $25,000 for individuals and $32,000 for couples, up to 50% of your Social Security benefit could be taxable.
If these income sources top $34,000 ($44,000 for couples), income tax could be due on as much as 85% of your Social Security benefit. These tax thresholds are not adjusted for inflation each year. “Careful planning can help minimize the tax impact and optimize your retirement income,” Neblett says.
[READ: Why Seniors Are Getting a Large Social Security COLA in 2023.]
Maximize Survivor’s Benefits
When one member of a married couple passes away, the widow or widower may be eligible for survivor’s payments. The surviving spouse can inherit the deceased spouse’s benefit payment if it’s more than his or her current benefit.
For example, if a husband gets $2,000 per month from Social Security and his wife receives $1,500 per month, the wife would be paid $2,000 per month after her husband dies because her husband’s payments were higher than hers. “If you are widowed, you may be able to claim your spouse’s survivor benefit while allowing your own benefit to grow, then switching to your benefit at a later age,” Woodly says.
Check Your Records
Your Social Security earnings record lists all the earnings that have been reported to the Social Security Administration using your name and Social Security number. You can create a My Social Security account and download your Social Security statement annually to review the information.
You can compare your earnings history to your W-2 form, tax return or pay stub. “A full-time worker may work 80,000 hours over their life paying into Social Security,” Ruiz says. Verify your records to make sure everything is accurate and consult a professional if you need further advice.
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10 Ways to Increase Your Social Security Payments originally appeared on usnews.com
Update 07/19/23: This story was published at an earlier date and has been updated with new information.
