In the United States, Social Security benefits are a crucial source of income for many retirees to sustain their livelihood. Data from the US Social Security Administration shows that approximately 40% of retirees rely on Social Security for over half of their post-retirement income.
A study by Bankrate in November 2024 further affirmed that Social Security is a “key income source” for American retirees. Among those nearing retirement, about 53% indicated they would need to depend on Social Security to cover essential household expenses. Among retirees, 77% rely on their monthly Social Security payments to maintain their household budgets.
Given the importance of Social Security benefits, how can one maximize their Social Security income? Let’s analyze some strategies.
When it comes to increasing Social Security benefits, a common misconception is that the payment amount is fixed, especially among retirees living on fixed incomes. However, by strategically planning your Social Security claiming strategy, boosting your benefits is not impossible. Here are five methods you can consider to enhance your Social Security income during retirement.
If you are in good health and anticipate a longer lifespan, delaying retirement as much as possible can result in higher Social Security income.
Neal Shah, CEO of CareYaya Health Technologies, stated, “If you can wait until age 70 to start collecting Social Security, your monthly benefit check could be up to 32% higher than if you claimed at full retirement age (66 or 67, depending on the birth year).”
Data shows that Americans who postpone claiming retirement benefits until age 70 receive about 76% more in Social Security income compared to those who start at the earliest age of 62.
The longer your work history before retirement, the higher your income from Social Security.
Shah told NTD Television, “Social Security benefits are calculated based on your highest 35 years of earnings, so a shorter work history could significantly reduce your benefits. Therefore, maximizing your income during your pre-retirement career is crucial. Today’s higher income translates to more generous Social Security benefits in the future.”
Shah suggests optimizing spousal benefits by adjusting claiming strategies. He said, “If possible, work part-time while delaying your own benefits.”
Given the complexity of Social Security claiming rules, consulting a trusted financial advisor on how to best coordinate strategies between spouses for the most optimal outcomes is advisable. Married couples can potentially coordinate their Social Security claiming timelines to increase their combined monthly benefits, providing better financial security, especially after the death of one spouse.
In general, a strategy can involve the higher-earning spouse delaying Social Security until age 70 while the lower-earning or non-working spouse begins claiming benefits early, for example, at 62. This approach allows the lower-earning spouse to start receiving benefits at 62 while the higher-earning spouse waits until 70 for increased benefits.
Shah emphasized that most couples do not coordinate their Social Security claiming strategies, which could result in “thousands of dollars in benefits lost each year and lower benefits for both parties.”
If you are still working, endeavor to increase your income by all means possible. For instance, if your current employer does not offer a raise, consider exploring other job opportunities.
Yehuda Tropper, CEO of Beca Life Settlements in New Jersey, explained, “This will boost your lifetime earnings record, consequently increasing your Social Security benefit.”
For those who are divorced or widowed, staying informed about Social Security payment details related to former spouses may enhance your Social Security income.
Tropper informed NTD, “A common mistake is that divorced individuals who were married to their ex-spouse for over 10 years fail to claim their ex-spouse’s Social Security benefits. Additionally, many widows are unaware they can start receiving (reduced) survivor benefits at age 60.”
These strategies and insights can help retirees and soon-to-be retirees in the United States make informed decisions to optimize their Social Security benefits and secure their financial well-being in retirement.