Maximizing your Social Security benefits can make a significant difference in your retirement income. Here are three essential strategies to help you increase your Social Security check and ensure financial stability in your golden years.
Your Social Security Benefits Aren't Always Set in Stone
Retirement can be a time of financial uncertainty. It's reported that six in ten retirees consider their Social Security check a major source of income. However, many seniors struggle with rising costs that diminish their purchasing power. Since 2010, the average retiree has lost 20% of their purchasing ability due to inflation and increasing costs. Fortunately, there are ways to boost your benefits beyond the standard annual cost-of-living adjustments (COLA).
1. Keep Working in Your 60s
One effective strategy to maximize Social Security benefits is to continue working or even return to work in your 60s. The Social Security Administration (SSA) calculates your monthly benefit based on your entire earnings history. While previous earnings can be adjusted for inflation, those adjustments are capped once you reach age 60.
Earnings increases in your 60s can potentially raise your average earnings, which means a higher Social Security check. The SSA recalculates your benefit at the start of each year based on the previous year’s earnings. If your compensation lifts your average earnings, your benefits will increase accordingly.
However, consider the potential pitfalls. If you haven't reached full retirement age (FRA) and your income exceeds a certain limit (for 2025, this limit is $23,400), the SSA will withhold a portion of your benefits. For every $2 earned above this limit, $1 will be withheld. Those nearing FRA have a higher threshold of $62,160, with a corresponding withholding of $1 for every $3 earned over that amount. Thankfully, any withheld benefits will be adjusted when you reach your FRA, often resulting in a higher future check.
2. Hit the Undo Button
Your decision to claim Social Security benefits early doesn’t have to be permanent. There are options available to help delay these benefits, allowing you to receive a larger check later. One option involves withdrawing your Social Security application within the first 12 months. This will require you to repay any benefits you’ve already received, which may not be feasible for various reasons.
Another option involves suspending your benefits. Once you reach FRA, you can suspend your benefits until age 70. This strategy stops your benefits and lets you accrue credits at a rate of two-thirds of your previous monthly amount for each month you remain suspended. For many, suspending can mean an increase of up to 24% in their benefits by waiting until age 70. This could be particularly advantageous if your investments have performed well early in retirement, as it allows you to have greater financial flexibility later on.
3. Claim Benefits Based on Your Ex-Spouse’s Earnings
For divorced individuals, there’s a lesser-known but potentially lucrative route to enhance your benefits. If you were married for at least 10 years and are single now, you may be eligible for benefits based on your ex-spouse’s earnings without impacting their benefits. This allows you to claim a benefit worth up to half of their primary insurance amount (the amount they would receive at full retirement age) while potentially still receiving a higher benefit based on your work record.
If your ex-spouse has passed away, you may qualify for survivor benefits if you didn't remarry before age 60. These survivor benefits can be considerable, based on either what your ex was receiving before their passing or their primary insurance amount if they hadn’t yet claimed benefits, ensuring you don’t miss out on potential income. It’s essential to inform the SSA about your marital history to take advantage of these benefits.
The Overlooked Social Security Bonus
Many retirees may be missing out on significant income boosts. Strategies to increase Social Security check by learning about lesser-known benefits can contribute significantly to your retirement security. For example, there are ways to gain an additional $22,924 annually simply by applying certain known strategies effectively. Learning how to fully maximize your Social Security benefits may not only enhance your income; it can provide peace of mind during retirement.
Taking proactive steps now can ultimately ensure a better financial landscape as you age. Whether you choose to continue working in your 60s, explore withdrawal or suspension options, or tap into benefits based on your ex-spouse’s earnings, these methods can lead to higher monthly benefit checks and a more secure financial future. Make sure to evaluate each option carefully and consult a financial advisor or utilize a Social Security calculator to assess your unique situation and make informed decisions moving forward.