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Social Security: 3 Smart Ways to Get More Benefits

Maurie Backman, The Motley Fool

It's estimated that nearly half of U.S. households today have no money set aside for retirement. And that can only mean one thing: Countless workers will come to rely heavily on Social Security once their careers come to a close.

If you're counting on Social Security to pay your bills in retirement, you should know that there are steps you can take to boost your benefits and get more money out of the program. Here are just a few strategies you might employ.

1. Extend your career once your earnings reach a high

Your Social Security benefits are calculated based on your highest 35 years of earnings. But if you're like most people, you probably earned an entry-level salary when you first started working, and will find yourself making considerably more money later on in your career. Therefore, if you extend your career a few years past your originally anticipated retirement date, you'll boost your benefits by replacing some lower-earning years with higher-earning years.

Here's a simplified example. Imagine you worked every year between the ages of 30 and 65, only for the first three years of your career, you earned $25,000 annually. If you're earning $100,000 by age 65 and you work three more years instead of retiring at that point, you'll replace three years of $25,000 in income with $100,000 in income. And that, in turn, could raise your benefits substantially.

2. Fight for raises throughout your career

We just learned that Social Security benefits are earnings-based, so it stands to reason that the more money you make while you're working, the more you stand to collect as a senior. That's why it pays to fight for raises during your working years. Daunting as those conversations might be, it's important to keep tabs on what your industry is paying and make sure your earnings are up to par.

Remember, the salary you make at one job will likely influence the compensation you receive at the next job you take, and then the job after that, and so forth. If you have reason to believe you're not being paid what you're worth, present that data to your manager and make your case. Similarly, if you're a top performer at your company and consistently go above and beyond, you can request a pay bump even if your wages are decent to begin with.

3. Wait until you turn 70 to file for benefits

Once your full monthly Social Security benefit amount is determined based on your earnings record, you'll be eligible to collect it upon reaching full retirement age. (You can technically file for benefits as early as age 62, but if you don't wait until full retirement age, your payments will be reduced.) This age is a function of your year of birth, as follows:

Year of Birth

Full Retirement Age

1943-1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960

67

Data source: Social Security Administration.

That said, if you hold off on filing for benefits past full retirement age, you'll snag an 8% boost in payments for each year you delay. This means that if you're looking at a full monthly benefit of $1,500 at a full retirement age of 67, waiting until age 70 will increase each monthly payment to $1,860 -- for life.

Keep in mind, however, that this incentive runs out at age 70. Therefore, while you don't have to file for benefits once you turn 70, there's really no reason not to.

Even if you can't manage to wait on benefits until your 70th birthday, holding off for any amount of time will result in higher monthly payments. So if your full retirement age is 67 and your health starts failing at 68, thereby causing you to have to leave your job, you'll still get an 8% boost in benefits out of the deal.

The more money you collect from Social Security during your golden years, the easier a time you'll have making ends meet. Follow these tips to increase your benefits, and with any luck, you'll manage to enjoy the comfortable retirement you deserve.

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