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How to Maximize Social Security Benefits

September 07, 2022
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How to Maximize Social Security? Start Early

In this article, we are talking about maximizing! We are trying to provide the best benefit possible that fits your needs. The first key is to start early but that is not all.Do you know when the next best time to start is? Right now. If you didn't start early, that is OK. The next best step is to start now! 

Social security has this philosophy as well. Starting early is your best bet but if you feel like you have been behind, you can still achieve great success with a future benefits. Just remember, your benefit is based on your BEST 35 YEARS of earnings.

How does Social Security work?

Social security is one of the cornerstones of retirement and you have control of the outcome. You pay into "America's annuity" during your working life and then reap the (potentially) tax-advantaged income from it in retirement. For most people, it’s on autopilot until you get very close to retirement and have to decide when to start claiming your benefits. But there’s a lot more you can and should do throughout your working life to make sure you are building up an earnings record that will help you get the most benefits, whenever you choose to retire. You can read more about social security here.


What is social security?

The Social Security Administration (SSA) is the government agency responsible for keeping your records, calculating your benefits, and managing your social security journey. Back in the day, the SSA used to send everyone an annual letter listing every job you had reported, and how much you made each year.

It was interesting to be reminded about the part-time job you had in high school, but not really useful. They’ve gotten a lot better at providing relevant information in a very user-friendly way.


Set up a account

If you haven’t set up an account at, you should. You’ll be able to see your status in qualifying for benefits, and there’s also a calculator that will tell you approximately what your benefit will be. If you’ve already qualified, the calculator will be based on your actual earnings. If you haven’t, there’s another calculator you can use.

You need “credits” based on the amount of money you’ve paid in to qualify. You can earn up to four credits per year, which equates to ten years of work. So if you’re in mid-career, you’ve most likely already qualified for social security. Yay! Now the good part.

Having an approximate idea of your benefit amount while still working is great information because you still have time to increase it.  How much you get in benefits depends on two things – what age you claim benefits at and the SSA’s calculation of your income. And you control both those things.

In short, waiting to collect will bump up your annual benefit. But working those extra years doesn’t just give you the same increase everyone gets – because your late-career often corresponds to your highest income, you can increase the amount of income your benefit is based on.

We get into the details below.


How to max out Social Security

According to the Social Security Administration, the maximum monthly benefit a person can receive per month is $4,194 if they wait to file at age 70. For someone who requests benefits at full retirement age (currently at age 67 but can be as low as 66 and 2 months) is $3345, and $2,364 for someone who files at 62.

To receive the most in Social Security, it is essential to plan for your retirement a decade or so before the event. According to a recent Federal Reserve study, Social Security benefits are crucial because they were the most common source of retirement income in 2020.[1]

You are eligible to claim Social Security benefits at age 62, but you will receive a reduced benefit that will be locked in. In fact, there is a specific reduction calculation that goes like this, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced by 5/12 of one percent per month

If you sign up at age 62, your Social Security payments will be reduced by 25% if your full retirement age should be 66, and you will lose out on 30% of the monthly payments if your full retirement age should be 67. For example, a worker eligible for a $1,000 monthly Social Security check at their full retirement age of 66 would be paid $750 a month if they request Social Security at age 62.


4 Tips to Maximize Social Security

  • Work for a Minimum of 35 Years

Thirty-five years of earnings is the magic number for obtaining the optimum Social Security benefits. That’s because Social Security benefits are determined based on the 35 years that you earned the highest salaries in your various jobs. If you worked fewer years, then zeros are inserted into the calculation and that will reduce your benefits. If you worked 45 years, your benefit will be based on the highest 35 years of earnings.


  • Boost Your Income with a Raise or Second Job

If you can augment your income by getting a raise or generating income from a side hustle, that could increase each check you will receive from Social Security in retirement. Annual earnings of up to $142,800 in 2021 are used to calculate your retirement payments. So if you are earning less than $142,800, then you will be adding less into your calculation. 


  • Knowing your Full Retirement Age

The age when you are eligible for full retirement benefits varies depending on your birth year. If you were born in 1960 or later, full retirement age 67. This is later than most people think – we’re all used to it being 65. It changed a bit ago, and the calculation differs based on birth year, so if you were born in 1959 or before, it’s best to check. 

If you pull out your benefits before your full retirement age, they will be permanently reduced. 


  • Wait Until Age 70, if Possible, to Claim Benefits

Not everyone has this option but waiting until age 70 can be beneficial. After reaching your full retirement age, as explained above, payments will increase by about 8% per year that you hold off claiming Social Security up until age 70. After age 70, the additional benefit increases end.

There is a breakeven between your full retirement benefit and your maximum benefit. So waiting until 70.


Evaluating your health and Social Security

When to take social security can depend a lot on your health. If you have spent the prior decades focusing on your fitness, you could live longer. If you live longer, you can potentially afford to wait until age 70 to pull your benefit.

If you are more concerned about your lifespan being reduced for whatever reason, your benefit will be smaller, but maybe taking your social security earlier is the better option.

Health is a huge factor in how we plan for retirement and retirement income and should be factored into all retirement decisions. In the financial world, they have a specific term for this, it is called "longevity risk." The risk of outliving your money. 

Health is a huge component of the social security decision. 

The Takeaway

You’re probably doing a good job at saving in a retirement account, but don’t forget you can be proactive about social security benefits too. The first step is setting up an account and checking out what your estimated benefits are. From there, you can make incremental steps that can boost your lifetime income – and maybe even get you a healthier retirement.

[1] Report on the Economic Well-Being of U.S. Households in 2020-May 2020. Board of Governors of the Federal Reserve System.