How to Maximize Your Social Security Income

Use these tips to get the most out of your retirement benefits.

Almost 90 percent of U.S. citizens over age 65 receive Social Security benefits, according to the Social Security Administration. Even if you’re not retired, but are disabled and have minimal income and assets, you might qualify for Supplemental Security Income.

Understand how to maximize your benefits and learn how to navigate the complicated world of Social Security. Keep reading for 2018 Social Security tips to help you maximize your retirement benefits.

What’s Your Maximum Social Security Benefit?

In 2018, the maximum monthly Social Security benefit you can receive if you start collecting at full retirement age is $2,788, an increase of $101 from the maximum benefit in 2017. Your Social Security income is taxable and up to 85 percent of that income could be subject to income taxes, but you must calculate out the exact percentage by using a specific formula.

5 Steps to Help You Maximize Your Social Security Benefits

Most people don’t receive the maximum Social Security benefit. In fact, the average Social Security retirement benefit in 2017 was only $1,369, less than half of the maximum benefit at full retirement age. Although you might not be able to wait for your biggest monthly payout, follow these steps to maximize your benefits.

1. Maximize Your Earned Income Each Year

Your Social Security benefits are based largely on your earnings during your working years. The benefit formula looks at your Social Security earnings from your 35 highest earning years. The formula includes only income subject to Social Security taxes, so any investment or interest income — or earned income in excess of the Social Security wage base — doesn’t count.

The Social Security wage base is the maximum amount of earnings subject to Social Security taxes each year, which is $128,400 for 2018. To get the maximum benefit, you need to have 35 years in which your earnings equal or exceed the Social Security wage base.

If you are self-employed, you must report your income on your taxes not only because it’s the law, but also because if you don’t report that income and pay taxes on it, you won’t get credit for it when it comes to calculating your Social Security benefits.

Find Out: What Is the Maximum Social Security Tax?

2. Delay Taking Social Security Retirement Benefits

The longer you delay taking Social Security benefits, the larger your monthly benefit will be when you claim your benefits. Your full retirement age varies depending on when you were born.

For people born before 1937, full retirement age is 65 years old. The full retirement age goes up for each year after that you were born. Full retirement age is 67 years old if you were born in 1967 or later. If you claim your benefits before full retirement age — you can claim as early as age 62 — your benefits will be lower. On the other hand, you can delay taking your benefits until as late as age 70 and receive a larger monthly payout.

Learn More: How Your Retirement Age Impacts Your Social Security Benefits

3. Beware the Windfall Elimination Provision

If you receive a pension from an employer who didn’t take Social Security taxes from your paycheck, such as a government agency, your benefits might be reduced. At most, your Social Security benefit can be reduced by half of your pension for earnings that weren’t subject to Social Security taxes.

The more years of substantial earnings subject to Social Security taxes you have, the smaller your reduction. Each year, the amount of earnings necessary to qualify as “substantial earnings” adjusts for inflation. For example, in 1977, you needed only $4,125 of income subject to Social Security taxes to count as substantial earnings, but by 2017 the amount had increased to $23,625.

4. Track Your Status

Don’t wait until you’re retired to review your Social Security benefits. Instead, check each year to make sure your work record is accurate. If there are any errors, it’s much easier to prove it to the Social Security Administration when you have the records rather than decades later when you might not.

5. Don’t Claim Benefits Early If You’re Still Working

There is no Social Security income limit for receiving benefits if you’ve reached your full retirement age. If you claim your Social Security benefits before full retirement age and you’re still working, however, your benefits might be reduced depending on how much you earn. For the years before you reach full retirement age, your benefits are reduced by $1 for every $2 you are over the limit — and reduced by $1 for every $3 during the year that you reach full retirement age.

What’s the Difference Between Social Security and SSI?

The Social Security Administration also administers a program known as Supplemental Security Income, which provides benefits to disabled adults and children who have limited resources.

To be considered “disabled” for purposes of SSI eligibility, you must generally not be able to do any substantial, gainful activity — and your condition must be expected to result in your death or to last continuously for at least 12 months.

In addition, SSI benefits eligibility requirements stipulate that your available resources can’t exceed $2,000 for individuals or $3,000 for couples. You can get an SSI login and apply for SSI online if you:

  • Are at least 18 and younger than 65
  • Have never been married
  • Aren’t blind
  • Are a U.S. citizen
  • Have not completed an SSI application before
  • Are applying for Social Security Disability benefits at the same time you are applying for SSI

To apply for SSI for children, you must complete a paper application. As of 2017, the SSI benefit amount is $735 for individuals and $1,103 for couples.

Up Next: Social Security Myths You Need to Watch Out for