Social Security is a critical component of retirement income for millions of Americans. Understanding how to maximize your benefits can significantly impact your financial security in later years. Social Security can account for roughly 30% of income for individuals aged 65 and over, making careful planning essential.
Seven Key Strategies to Boost Your Social Security Check
Let’s explore seven actionable strategies to help you increase your Social Security benefits and delve into what you’ll actually receive after factoring in Medicare and taxes.
1. Boost Your Earnings
While commanding a raise isn’t always feasible, remember that your Social Security benefit is directly tied to your contributions. Earning a higher income throughout your career translates to larger Social Security checks later on. Consider exploring opportunities for better-paying positions or pursuing side hustles to supplement your income.
It’s important to note that Social Security only considers earnings up to a certain taxable maximum each year. In 2023, this maximum was $160,200 and it increased to $168,600 in 2024. Even if you earn significantly more than this amount in a given year, only the taxable maximum will be considered for Social Security calculations.
2. Work for at Least 35 Years
The Social Security benefits formula calculates your benefit based on the average of your 35 highest-earning years, adjusted for inflation. If you work less than 35 years, you’ll have years with zero earnings factored into the calculation, which can significantly reduce your benefit. Working at least 35 years ensures you maximize your benefit potential. Furthermore, working beyond 35 years could further increase your benefit if you replace lower-earning years with higher-earning ones.
3. Delay Claiming as Long as Possible
You become eligible for your primary insurance amount (PIA) upon reaching your full retirement age (FRA). The FRA is 67 for those born in 1960 or later. While you can elect to begin receiving Social Security benefits as early as age 62, doing so will result in a permanent reduction of approximately 30% in your monthly benefit.
For those seeking the maximum possible Social Security benefit, delaying past your FRA is the optimal strategy. You’ll accrue delayed retirement credits, adding an extra 8% to your benefit for each year you wait, up to age 70. This can substantially increase your monthly payments.
4. If Employed, Postpone Claiming Until FRA
If you’re still working, claiming Social Security before reaching your FRA can have implications for your benefits. In 2023, Social Security imposed earning limits on beneficiaries who hadn’t yet reached FRA, withholding a portion of their benefits:
- Prior to the year of reaching FRA: $1 is withheld for every $2 earned above $21,240. This threshold increased to $22,320 in 2024.
- From the year of reaching FRA until the month of full benefit eligibility: $1 is withheld for every $3 earned above $56,520. This threshold increased to $59,520 in 2024.
Once you reach your FRA, these earning limits no longer apply, and you can earn any amount without impacting your Social Security benefits. Even if you claim benefits early and continue working, Social Security will recalculate your benefit upon reaching FRA, crediting you for the withheld amounts, resulting in a higher monthly payment.
5. Explore Spousal or Survivor Benefits
If your current or former spouse earned significantly more than you, you might be entitled to a larger benefit based on their work history. Spousal benefits are available to current spouses and former spouses if the marriage lasted at least 10 years.
The maximum spousal benefit is capped at 50% of your spouse’s primary benefit. Claiming spousal benefits early will reduce the amount you receive. Unlike retirement benefits, you can’t earn delayed retirement credits by waiting past your FRA to claim spousal benefits. Your spousal benefit maxes out at age 67.
If you’re a widow(er), or a divorced spouse of at least 10 years whose former spouse has passed away, you could be eligible for survivor benefits. These benefits can be up to 100% of the deceased spouse’s benefit (if they were already claiming) or up to 100% of their primary insurance amount (if they hadn’t yet started receiving benefits).
You can claim survivor benefits as early as age 60 (reduced amount), rather than 62. Similar to spousal benefits, survivor benefits reach their maximum at age 67. Keep in mind that Social Security doesn’t allow you to collect multiple benefits simultaneously. You can receive either your own retirement benefit or a spousal/survivor benefit, but not both.
6. Consider a One-Time Do-Over
If you’ve already started receiving Social Security but now regret claiming early, you might have options to increase your future payments:
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Within 12 months of approval: You can withdraw your application for benefits and reapply later. However, you’ll need to repay all benefits you’ve received, including any amounts withheld for taxes and Medicare premiums.
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If you’re at FRA but under 70: You can request a suspension of your benefits to accrue delayed retirement credits, then reinstate them later. At age 70, Social Security will automatically restart your payments if you haven’t already done so.
7. Leverage Roth Retirement Accounts
While contributing to a Roth IRA or Roth 401(k) doesn’t directly increase your Social Security payment, it allows you to retain a larger portion of your benefit. Withdrawals from Roth accounts are generally tax-free in retirement since you’ve already paid taxes on the contributions. Traditional retirement accounts, on the other hand, offer tax breaks on contributions but require you to pay taxes on withdrawals in retirement.
Since Roth withdrawals aren’t considered income for Social Security purposes, saving in a Roth account maximizes the amount of your Social Security check that you ultimately get to keep.
Understanding the Average Social Security Payment
In 2023, the average Social Security payment for retired workers was $1,848 per month. This average is projected to increase to $1,907 in January 2024 due to the 3.2% cost-of-living adjustment (COLA).
The maximum monthly benefit for someone retiring at their FRA in 2023 was $3,627. With the 2024 COLA, this figure will increase to $3,822.
Medicare Deductions and Your Social Security Check
Most individuals don’t pay a premium for Medicare Part A; however, Part B premiums are typically deducted directly from Social Security checks. In 2023, the standard Part B premium was $164.90 per month. Higher-income individuals (above $97,000 for individuals or $194,000 for married couples) pay higher premiums.
In Conclusion: Is The Motley Fool Social Security Guide Worth It?
Maximizing your Social Security benefit requires a long-term, proactive approach. While increasing your payments isn’t always easy, the strategies outlined above can significantly impact your retirement income.
While Social Security provides a vital safety net for seniors, relying solely on it for retirement income can present challenges. Investing early and consistently is crucial for building a secure financial future. If you’re behind on saving, working longer and delaying Social Security benefits are valuable strategies for boosting your retirement income. The Motley Fool Social Security Guide, with its comprehensive advice, could be a worthwhile investment in your future financial security.
