How To Maximize Your Social Security Income

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Almost 90% 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, you might qualify for Supplemental Security Income or Social Security Disability Income.

Find Out: 5 Things Most Americans Don’t Know About Social Security
See: When Social Security Runs Out: What the Program Will Look Like in 2035

Keep reading for 2021 Social Security tips to help you maximize your retirement benefits.

What’s Your Maximum Social Security Benefit?

In 2021, the maximum monthly Social Security retirement benefit you can receive if you start collecting at full retirement age is $3,113, an increase of $150 from the maximum benefit in 2020. However, those who waited until age 70 to collect can receive up to $3,895 per month in 2021.

Your Social Security income is taxable. Up to 85% of that income could be subject to income taxes, depending on your income and filing status. But you must calculate out the exact percentage by using a specific formula.

Read: The Biggest Problems Facing Social Security

5 Steps To Help You Maximize Your Social Security Benefits

Retire Comfortably

Most people don’t receive the maximum Social Security benefit. In fact, the average Social Security retirement benefit in mid-2021 was only $1,555 — less than half of the maximum benefit at full retirement age and just 40% of the benefit received by those who delayed collecting until they turned 70 in 2021.

You might not be able to wait for your biggest monthly payout, but following these steps can 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 $142,800 for 2021. To get the maximum benefit, you need to have 35 years in which your earnings equal or exceed the Social Security wage base.

More: Next Year’s Social Security Checks Could Get Biggest COLA Bump in 13 Years

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.

If you’ll have worked fewer than 35 years by the time you retire, the Social Security Administration will still use 35 years of income to calculate your benefit. That means you’ll have $0 earnings factored in for missing years. Similarly, you might have years of low earnings, such as from entry-level or part-time work, factored in. Picking up a side gig can help you replace those $0- and low-earning years with higher income to increase your Social Security benefit — even if you’re already retired. 

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.

Retire Comfortably

For people born before 1937, full retirement age is 65 years old. The full retirement age goes up for each subsequent birth year. Full retirement age is 67 years old if you were born in 1960 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 Government Pension Offset and Windfall Elimination Provision

If you receive a pension from an employer, such as a government agency, that didn’t take Social Security taxes from your paycheck, and you’re entitled to benefits from other jobs you’ve had, your Social Security benefits can be reduced under the Windfall Elimination Provision. The provision applies to workers who paid Social Security tax on fewer than 30 years of substantial earnings in the jobs that made them eligible for Social Security benefits. 

The more years of substantial earnings subject to Social Security taxes you have, the smaller your reduction. The maximum Social Security benefit reduction is 50% of your monthly pension, and it can’t zero out your retirement benefit, according to AARP.

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 in 2021 the amount is $26,550. 

Social Security spouse, widow and widower benefits can be similarly affected by the Government Pension Offset. If you collect these benefits and you worked for an employment that didn’t deduct Social Security taxes from your paycheck, you could see your Social Security benefits reduced by two thirds of your monthly pension payment. For example, a monthly pension payment of $1,200 would reduce your Social Security by $800.

With either reduction, working longer in jobs with Social Security tax withholding — and with substantial earnings in the case of the WEP — will maximize your Social Security benefits.

See: Social Security Cost-of-Living Adjustments Aren’t Enough To Pay Higher Costs for Seniors

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’re full retirement age or older for the full year — for example, if you turned 66 in 2020. 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.

The limit for those younger than full retirement age is $18,960 in 2021, with $1 deducted for each $2 earned after that.

If you reach full retirement age in 2021, the earnings limit is $50,520 in 2021, after which your benefits will be reduced by $1 for every $3 you earn for the rest of the year.

What’s the Difference Between Social Security, SSI and SSDI?

The Social Security Administration also administers programs known as Supplemental Security Income and Supplemental Security Disability Income that provide benefits to disabled children and adults over age 65 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.

Find Out: Cost of Living — What’s Included and How’s It Calculated?

To be considered for SSDI benefits, you must be unable to work in your current job or adjust to other work because of a condition expected to last at least one year. In addition, you must meet the Social Security Administration’s definition of a disability and be younger than full retirement age. If you qualify, certain family members might also be eligible to collect benefits based on your eligibility.

As of 2021, the SSI benefit amount is $794 for individuals and $1,191 for couples. The maximum SSDI benefit is $3,148 in 2021, but the amount you might qualify for depends on your work history, according to the National Council on Aging.

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Daria Uhlig contributed to the reporting for this article.

Last updated: Oct. 7, 2021

About the Author

Natalie Campisi is a Los Angeles-based writer and producer with more than 17 years of experience. She started her career as a journalist, reporting for dailies, the Associated Press and on Capitol Hill. She’s produced podcasts, commercials and online video content for everyone from tech startups to chocolatiers.

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