Maximizing Social Security Benefits: Tips for an Optimal Retirement Strategy
Written by
Cynthia Measom
Edited by
Amber Barkley
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As retirement approaches, it’s important to lock down a financially stable future. And although Social Security benefits might not cover all your expenses in retirement, every little bit helps. The average monthly benefit for retired workers is $1,837.39, according to Social Security’s monthly statistical snapshot for June 2023. However, the maximum benefit is $4,555.
Understanding how you can leverage your Social Security benefit to your advantage — no matter the amount — can help you pave the way for a more rewarding retirement journey. Here are strategies to help you do it.
Work at Least the Full 35 Years
Al Kushner, author, retirement specialist and founder at Real Easy Medicare, said, “The Social Security Administration calculates your benefit amount based on your 35 highest-earning years. If you work under 35 years, the calculation will include years with zero income, which can significantly lower your benefit amount.”
Max Out Earnings Through Full Retirement Age
“Your benefits are calculated based on your lifetime earnings, so the more you earn up to the annual Social Security wage base limit — which is $160,200 for 2023 — the higher your benefits will be,” Kushner pointed out.
Taking on a side hustle can boost your annual earnings.
Delay Benefits Until Full Retirement Age
“If you can afford it,” Kushner said, “consider delaying your claim until your full retirement age; this can increase your monthly benefit amount.”
If you were born in 1960 or later, your full retirement age is 67. But waiting a few years more after your full retirement age can make an even bigger difference in your monthly benefit amount. A recent study found that retirement benefits taken at age 70 remain 76% higher, adjusted for inflation, than if you claimed them at age 62.
Claim Spousal Benefits
“If your spouse has a higher lifetime earnings record, you might benefit from claiming spousal benefits, which could provide up to half of your spouse’s full retirement benefit,” shared Kushner.
Work Longer, Even for a Year or Two
You can start claiming benefits at 62, but your full retirement age is between 66 and 67, depending on when you were born. If you choose to receive your benefits early, they will be reduced a small percent for each month that’s before your full retirement age.
Even if you don’t want to or can’t work until your full retirement age or beyond, working a year or two more can benefit you. “Adding additional high-income years can replace lower-earning years in your 35-year average, potentially increasing your benefits,” Kushner said.
Check Your Earnings Record
“This ensures the Social Security Administration has correct information about your earnings and taxes paid into Social Security,” said Kushner.
If you check your earnings record and find that it’s incorrect and you have a “my Social Security” account, you might be able to correct your earnings record online. If not, call (800) 772-1213 to request that your earnings recorded be corrected.
Understand How the Government Calculates Social Security
“Knowing how your benefit is calculated can help you decide when to start claiming benefits,” Kushner said. “The age at which you begin claiming Social Security can significantly impact your lifetime benefit amount. If you continue to work in your 60s, not only could you add to your highest-earning years, but you could also delay claiming Social Security, which increases your monthly benefit.”
Invest Early Retirement Benefits
“If you choose early retirement, consider investing your benefits instead of spending them to increase their value,” said Kushner.
Note that the only way this would work is if you do not need your Social Security benefits to live on and you’re willing to invest over an extended period, such as 10 years.
Use the Strategies That Work for Your Financial Situation
When it comes to your Social Security benefits, getting the most of them is not one-size-fits-all.
“Everyone’s situation is unique, and what works best for one person might not work well for another,” Kushner said. “Before deciding, it’s essential to consider all factors, including health, life expectancy, need for income and future financial obligations.”
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