How do you push your benefit into the higher end of the scale? Don't allow yourself to be shortchanged just because Social Security is so impossibly complicated. Follow these 18 tips to maximize your payout, to help you stretch your retirement savings.
Tips for maximizing Social Security benefits
1. Watch for errors
Long before you retire, create a "my Social Security" account on the agency's website and make sure the information about you, your earnings and the Social Security taxes you've put in is all correct.
It pays to pay attention to the details so that you receive your fair share for your lifelong contributions.
Errors can occur, given that the benefits calculation involves multiple variables and complex data. Download and go over your estimated benefit statement on a regular basis, because mistakes can reduce your payments.
2. Put in your 35
The best way to maximize your benefits from Social Security is to put in a long career of paying into the program.
Your payments will be based on your highest 35 years of earnings, so it pays to stay in the game until you've hit at least 35 years of service.
Keep in mind that years with zero income will have a big impact on the average earnings calculation.
3. Earn more during your work years
Social Security benefits rely on a calculation of your "best 35," up to annual limits. In 2019, the maximum you can earn that will count toward your eventual payout from the program is $132,900. (That's also the maximum income subject to Social Security taxes.)
One of the keys to receiving the highest possible benefit is to hit the threshold in 35 years. But even a few years of increased income can make a difference in what you receive in retirement.
If you can work more hours or take on side jobs — maybe driving for Lyft or Uber — you'll receive more from Social Security. Even better? You can sock extra money away in your retirement account during your higher-income years, to supplement your Social Security.
4. Work longer and delay your claim
If you can hold off on claiming your Social Security, the system will reward you with a bigger monthly benefit. You can start collecting at age 62, but you'll receive a reduced monthly benefit for as long as you live.
Each year that you wait beyond your full retirement age (66 or 67, depending on when you were born) increases your benefit amount by 8%, until you reach age 70.
Waiting until 70 is another one of the keys to receiving the maximum benefit. If you're still working in your 60s and earning a good income, it makes sense to work longer, put more money into savings and bank more high-earnings years in your best 35.
5. Or, apply as early as you can
It makes sense to delay receiving Social Security if you're in good health and expect to be around a long time.
But if you think might live an average lifespan or less, you may want to start collecting benefits as soon as you reach 62.
True, you won't receive as much money per month as you would if you were to hold off until age 70. But you may get more money overall than if you waited for bigger payments.
6. Don't let the feds tax your benefits
You could lose a portion of your Social Security benefits to federal income tax, under a complex formula.
For example, if you and your spouse file taxes jointly, up to 85% of your benefits may be taxable. But that's only if your adjusted gross income plus your nontaxable interest plus half of your combined Social Security equals $44,000 or more.
We told you it was complicated! Avoid the tax trap by working less in retirement, or by doing more advance planning. You might want to roll savings into a Roth IRA, because withdrawals from a Roth usually won't count toward taxable income.
7. Move to another state if you have to
Most states will leave your Social Security alone, though 13 may impose state taxes on your benefits, depending on your income.
The 13 are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.
But if your state is on that list, don't be too quick to flee. You may find that the overall tax picture where you are is more friendly for retirees than in other places.
8. Take advantage of spousal benefits
Social Security spousal benefits can be a boon if your life partner has earned much more than you have. You're able to receive either a benefit based on your own earnings or one that's equal to 50% of your spouse’s benefit.
Your spouse's payments won't be affected if you decide to collect a spousal benefit.
Divorce doesn’t necessarily alter the equation. As long as the marriage lasted over 10 years and you have not remarried, you can draw Social Security benefits based on a former spouse's earnings.
9. Delay your divorce
While it’s not always workable, there can be a good financial reason to reach the 10-year mark in a marriage.
A divorced person can claim spousal benefits only if the union lasted long enough to hit that magic number for the Social Security Administration.
If you are facing a divorce negotiation, it can be worth it to push the settlement date back a few months if you are near the margin.
10. Collect spousal payments and keep working
If you and your spouse have earned a similar income and your better half is ready to call it quits at full retirement age, you could collect a spousal benefit while continuing to work past your own full retirement age.
Note that the rules changed in November 2015 to close this potentially lucrative loophole.
But you may still qualify for the bonus benefit if you were born before Jan. 2, 1954.
11. Lost your spouse? Seek survivors benefits
If your spouse or even your ex has died, you can collect their benefit amount if it's greater than your own.
And you don't have to wait until your full retirement age. You can receive payments starting at age 60, though the benefit will be reduced if you claim early.
The rules for determining your survivors benefit amount can be complicated and are based on your age, marital status, remarriage and other factors.
12. Claimed benefits too early? Walk that back
Let's say you start taking a reduced Social Security payout at 62 because you need the money — but then, you land a job.
You can turn back the clock: pay back your Social Security money so you can collect a fatter benefit later.
You have only 12 months to change your mind, and each American gets only one mulligan (or do-over) in their lifetime.
13. Take Social Security while on unemployment
If you've been laid off and are old enough for Social Security, you might be able to receive unemployment and Social Security benefits at the same time.
Check your state's rules. Some states “claw back” jobless benefits once you're collecting Social Security.
But the federal government won't reduce your Social Security if you're taking jobless benefits.
14. Don't earn too much if you retire early
Once you retire and start taking Social Security, it’s crucial to keep a close eye on any extra money you make, because that can reduce your benefits.
If you're younger than your full retirement age, Social Security in 2019 cuts $1 from your benefits for every $2 you earn over $17,640.
In the year that you reach full retirement age, your benefits will shrink by $1 for every $3 earned above $46,920 — until you hit your birthday. After that, you can earn as much as you want, with no impact on your benefits.
15. Get a second opinion
As you've undoubtedly gathered by now, Social Security can be tricky — with a lot of nuances. The program can be so convoluted that staffers in different Social Security Administration offices might interpret the rules differently.
A few assumptions in the wrong direction could cause you to lose thousands of dollars across your golden years of retirement.
So, if you don't like the benefit estimate you receive from one Social Security office, try another.
16. Claim dependents in retirement
If you find yourself caring for children under 19 after your retirement party, dependent benefits can help you raise them.
Eligible dependents may include biological children, stepchildren, adopted kids or even grandchildren.
They can receive a monthly payment of up to half of your benefit amount, and your benefits will remain intact. Together, you and your dependents can receive up to 180% of your full retirement benefit.
17. Apply for extra benefits if you're poor
Supplemental Security Income (SSI) benefits are availability to the poorest Americans 65 and older, with income and assets below certain levels. The thresholds vary from state to state.
The Social Security Administration says you may qualify if the things you own are worth no more than $2,000 for a person, or $3,000 for a married couple. Your home doesn't count toward the total.
The typical monthly SSI payment in 2019 is $771 for one person, $1,157 for a couple. Some states add to the benefit. Americans younger than 65 can receive SSI if they are blind or unable to work because of a severe disability.
18. Use a calculator and seek help
Is your head spinning so hard by this point that you're going to fall off your chair? Hold on — and get yourself some backup. Start by using a free online Social Security calculator, such as AARP's.
Then, ask friends for the name of a good certified financial planner.
A CFP professional can review your savings, income sources, taxes and other factors to help you make the best Social Security decisions for your financial situation.