5 Ways to Increase Your Social Security Benefits — Plus One Bonus Strategy
The idea that retirees can live off Social Security alone is a bit of a holdover from the old "automatic retirement at 65" days. For the most part, your parents and grandparents weren't thinking about 30 or 40-year retirements, active living into their 70s or 80s, or cycling in and out of the workforce to pursue new challenges and passions. Most -- but not all -- of today's retirees would have a hard time relying solely on their Social Security benefits to cover monthly expenses, especially in the later stages of retirement when health care costs tend to spike.
However, just because Social Security has a different place in the retirement equation than it once did, that doesn't mean your benefits aren't still incredibly valuable! If you work hard and plan ahead with your financial advisor, you can utilize these five strategies to boost your benefits, pad your nest egg, and hopefully feel a little more secure about your retirement spending plan.
1. Work for 35 Years or More
Social Security benefits are based on the average indexed monthly earnings (AIME) of your highest 35 years of reported income. If you work fewer than 35 years -- or don't earn 35 years’ worth of taxable income -- zeros are averaged into the calculation, lowering your benefit.
As retirement nears, you might decide to work a couple extra years to hit the 35 year mark, or to replace any low- or zero-income years in your earnings history, especially if you've had a successful career (see my next strategy).
2. Increase Your Earnings
The more you earn over the course of your 35 highest-earning years, the more Social Security tax you'll pay, and the bigger your eventual benefits will be.
To a point!
Social Security has wage base limits ($168,600 in 2024 and $176,100 in 2025) for how much of your income is subject to the tax that funds the whole Social Security pool, and eventually your benefits. Anything you earn above those thresholds is exempt from Social Security taxes.
Still, this is one instance where you should see the benefits of paying higher taxes in black and white once you do claim your benefits. That's something to keep in mind as you're thinking about working towards a promotion or investing in education that might help you make a major career pivot.
3. Delay Claiming Benefits
You can claim Social Security benefits as early as age 62, but each year you delay (up to age 70) your eventual benefits go up. And if you delay past your full retirement age, your benefit will increase by approximately 8% per year.
Unless a senior needs their benefits to pay the monthly bills, cover an emergency, or fund a specific retirement goal, Keen Wealth almost always advises folks to delay taking Social Security as long as possible. If you're able to live the lifestyle you want in retirement without Social Security, once you do start cashing those checks you'll have a lot of options for best uses later in retirement when you might need some extra funds the most.
4. Coordinate Spousal Benefits Strategically
Spouses don't have to be on the same retirement or Social Security timelines. She might love her job and want to keep working as long as possible; he might be counting down the days until he turns 62 and can claim Social Security to fund an early retirement goal. If both spouses are retired, one might claim their benefits, the other might wait until full retirement age to maximize benefits. As always, it's a couple's specific situation and goals that determine the best course of action.
But Social Security benefits also have some important estate planning considerations. If you pass after waiting until full retirement age to claim Social Security benefits, your spouse can collect 100% of your benefits.
In many cases, widows and widowers have two sets of Social Security benefits to coordinate: their survivor benefits, and their own. While you can claim survivor benefits starting at age 60, if you delay, survivor benefits will increase until you reach full retirement age for survivor benefits at age 66 or 67, depending on your birth year. You also can't take both your own benefits and your deceased spouse's at the same time. If one spouse's benefits will be significantly larger at full retirement age, the survivor might take the lower benefits first and let the larger benefits continue to grow.
Couples should carefully consider their ages, their health, and their earnings as they decide when to retire, when to take their individual Social Security benefits, and the best way to care for a surviving spouse.
5. Avoid Claiming Benefits While Still Working
If you claim Social Security before your full retirement age and continue working, your benefits may be reduced if your earnings exceed the annual earnings limit ($22,320 in 2024). Once you reach your full retirement age, your benefit will be adjusted to reflect the reduction, but it’s usually better to avoid the initial reduction.
Work with your advisor to figure out if you're going to lose more in total benefits over time than you'll gain in the short term by taking Social Security before full retirement age. Your advisor might also suggest some strategies that can reduce your taxable income in a given year, which might make taking Social Security early more beneficial.
Bonus Strategy: Check Your Social Security Record
A couple years ago, the Social Security Administration redesigned its website to provide folks with a much clearer understanding of their benefits and how they're calculated. You can create a free account to check on things like your earnings and work history, and to plan ahead for what your benefits will be once you do claim them. It's a good idea to review your record at least once per year, as any errors could affect your benefits.
Keen Wealth can help you assess your Social Security earnings history and strategies for your benefits as part of our year-end financial review process. Schedule your appointment today and let's make sure every piece of your financial plan is in the best possible shape for the year ahead.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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