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3 Social Security Secrets for Even Bigger Checks
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3 Social Security Secrets for Even Bigger Checks

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3 Social Security Secrets for Even Bigger Checks

You probably wouldn't accept a new job without knowing how much you were going to get paid and what your opportunities for advancement were. But when it comes to Social Security, most people never bother to inquire about what they'll get or how they can increase their benefits.

The secrets to growing your Social Security checks aren't hard to find. They just require a basic understanding of how the government calculates your benefits. If that sounds like a snoozefest, don't worry. The three tips below will show you how easy it can be.

Image source: Getty Images.

1. Work longer

This isn't the tip most of you were hoping to hear, but it's actually one of the most effective ways to give your Social Security checks a big boost. Your benefits are based on your average monthly income over your 35 highest-earning years, adjusted for inflation, or your average indexed monthly earnings (AIME). If you don't work for at least 35 years, the Social Security Administration adds zero-income years to your calculation, which can send your checks plummeting.

Let's say you earned $40,000, adjusted for inflation, every year for 35 years. Based on the current benefit formula, your scheduled Social Security benefit would be $1,676 per month. But if you only worked for 34 years, that zero-income 35th year would drop your checks to $1,645 per month. It's only a $31 difference, but if you claim benefits for 30 years, you'd end up with $11,160 less. That's enough to cover a couple months of expenses for most retirees.

If you've already worked at least 35 years, working longer isn't a guarantee your Social Security checks will go up, but it's highly likely. Most people earn more money later on in their careers than they did as newly minted graduates, and as you rack up more high-earning years, your AIME will climb and you'll get larger checks as a result.

2. Choose your starting age carefully

Signing up for Social Security as soon as you become eligible at 62 gives you more years of checks, but it might actually cost you in the long run. It depends on how long you live.

The Social Security Administration uses your AIME and the current benefit formula to figure out how large your checks will be at your full retirement age (FRA). For workers today, that's anywhere from 66 to 67. If you want the full amount you're promised, you have to hold out at least that long.

When you start early, the Social Security Administration does another calculation, not designed to give money this time, but to take it. You only get 70% of your scheduled benefit per check if you start at 62 and your FRA is 67. If your FRA is 66, you get 75% of your scheduled benefit per check if you sign up right away.

Every month you delay benefits increases your checks slightly, and if you delay past your FRA, they'll continue rising until you hit your maximum benefit at 70. That's 132% of your scheduled benefit per check if your FRA is 66 or 124% if your FRA is 67.

The right starting age for you depends on your goals and life expectancy. Delaying is almost always the better bet if you want to go for your largest lifetime benefit and believe you'll live into your 80s or beyond. But if you can't afford to delay or you don't think you'll live long, starting earlier is wiser. There's no single best answer here. You just have to evaluate your situation and decide which starting age will give you the best deal.

3. Coordinate with your spouse

Married couples don't just have their own benefits to think about. Spouses of eligible workers are entitled to Social Security benefits also, even if they've never worked a day in their lives. If you're claiming on your partner's work record, though, you have to wait for them to sign up before you can. And if they start early, they'll reduce your benefit too.

For couples where both partners qualify for benefits in their own right, the best strategy for maximizing household benefits depends on the size of each person's benefit. When they're similar, it's best for both to delay benefits as long as they can if they think they'll live long enough to reap the rewards of larger checks.

When one spouse has a much larger benefit than the other, it's more important for the higher earner to delay benefits. If the lower earner needs to start early to help the couple out, they can do so. Then, when their spouse signs up for benefits, the Social Security Administration will automatically switch the lower earner over to a spousal benefit if it's more than what they qualify for on their own.

As the three tips above show, the true secret to maximizing your Social Security checks is understanding how the government calculates them and leveraging that for your benefit. Stay up to date on any changes to the program that could affect you and make sure you have plenty of savings on your own no matter what. Social Security was never designed to cover all your expenses in retirement, so you need to treat it like a piece in your retirement puzzle, not the whole picture.

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