Social Security serves as a key source of income for millions of retirees nationwide. If you're hoping to maximize those benefits when it's your turn to collect, here are a few things you can do.
1. Hold off on filing for benefits
Many people rush to claim Social Security at 62 because it's the earliest possible age to file for benefits. But if you're looking to boost those monthly payments, you'll want to hold off as long as possible -- which means waiting until age 70.
Though your Social Security payments themselves are calculated based on how much you earned during your career, the age at which you first file for benefits can cause that number to go up, go down, or stay the same. If you start taking benefits at what's known as full retirement age, or FRA, you'll get your base benefit amount, so to speak, in full.
Here's what your FRA will look like based on the year you were born:
Year of Birth
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.
If you were born in 1962 and your full monthly benefit amount, based on your earnings history, is $1,500, then you'll collect exactly $1,500 a month if you first file for Social Security at age 67. File at 62, meanwhile, and you'll knock each monthly payment down to $1,050. But if you hold off until age 70, you'll end up boosting your payments to $1,860. That's because you're entitled to an annual 8% increase for each year you delay Social Security past FRA, up until age 70. So if you retire at 67 but have enough savings to tide yourself over a bit, waiting those three years could put a lot more cash back in your pocket.
2. Work longer to boost your base benefit amount
Your Social Security payments themselves are a product of how much you earned during your top 35 working years. Now if you're like most people, you probably earned a lot less earlier on in your career, and your wages grew over time. So if you're in your 60s and are still working, but earning a much higher salary than you did in your 20s and 30s, then putting in a few extra years on the job will boost your average by replacing some lower earnings with higher earnings.
This strategy especially makes sense if you took time off during your career (say, to raise a family or care for a loved one), and don't have a full 35 years of work on the books. That's because for every year you didn't bring home an income, you get a big fat $0 factored into your personal benefits equation. Therefore, if you work a bit longer than expected, and replace several $0 years with an actual salary (and a decent one at that), you'll end up raising your benefits in the process.
3. Fight for raises during your career
Regardless of what industry you're in, yearly raises aren't always a given. And even if your company does give out raises, you might see just a small boost from year to year. That's why it's critical to fight for raises throughout your career. Not only will doing so give you more money to work with when you're younger, but the more you earn, the higher your eventual Social Security benefits will be.
Though negotiating raises can be challenging, if you go in having done your research, you're likely to come out ahead. Rather than march over to your boss demanding more money, dig around online and see what others in your geographic area and line of work are commanding. Sites like Glassdoor, for example, let you put in your job title and see what it should be paying based on where you're located, so if you see that there's wiggle room for an increase, you can use that data to your advantage.
Snagging raises during your career might also be a matter of jumping to different companies as necessary. If there's no room to move up at your current place of work, getting a new job might be the key to a promotion and the pay increase that comes with it.
We all want to make the most of Social Security. If you're able to wait on taking benefits, work a few extra years, and be vigilant about boosting your earnings, you'll be thankful for it when the time comes to file your claim.
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