Make the Most of Your Social Security Benefit

Social Security is a fleeting resource used to provide added income for those in retirement. Since it was created in 1935, many strategies have been developed to help make the most of your benefits. Here are just a few of those strategies:

Max Out Your Earnings

Waiting until your full retirement age (FRA) to claim your benefit is a sure-fire way to help you earn more in Social Security income. For example, if you were born between 1943-1954, your FRA would be 66 and you be entitled to your full benefit.¹  If you were to begin withdrawing before age 66, your benefit would be significantly reduced. Working for at least 35 years is another way to max out your benefit because the Social Security Administration “totals your earnings from your 35 highest-earning years and uses an average indexed monthly earning (AIME) formula to come up with the benefit you will receive at your full retirement age.”²

Claim Spousal Payments

If you have not worked or do not have enough Social Security credits to qualify for your own benefits, you could be eligible to receive spousal benefits. Your full spouse’s benefit could be up to one-half the amount your spouse is entitled to receive at their full retirement age. If you choose to begin receiving spouse’s benefits before you reach full retirement age, your benefit amount will be permanently reduced. If you were married for at least 10 years, you can also claim Social Security benefits based on an ex-spouse’s work record.³

Reduce Taxes

While you cannot avoid taxes completely, you can take steps to reduce them. If you choose to continue working after you begin receiving Social Security payments, the IRS may tax your Social Security benefit. “Anywhere from 50% to 85% of your benefit payment can be subject to federal taxes.”⁴ One option could be to work with your financial and tax professionals to spread out your income from various sources to possibly avoid increased taxes. Several tax changes have also recently been made with the SECURE Act including eliminating the stretch provision, removed the age limit for IRA contributions, and raised the age for required minimum distributions.² You could be taxed at every turn if you’re not prepared, so it’s important to implement tax management.

No one knows how long we will be able to take advantage of Social Security benefits. It is predicted that if left unchanged benefits will be payable in full until 2037.⁵  We will also have to wait and see the impact President Biden’s plans will have. In the meantime, sit down with your financial and tax professional to see if maxing out your earnings, claiming spousal payments, and reducing taxes are right for you. A financial professional can help you create a plan to make the most of your Social Security benefit.

1. https://www.ssa.gov/benefits/retirement/planner/agereduction.html
2. https://www.investopedia.com/articles/retirement/081616/5-tips-increase-your-social-security-check.asp
3. https://faq.ssa.gov/en-us/Topic/article/KA-02011
4. https://www.ssa.gov/benefits/retirement/planner/taxes.html
5. https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

American Retirement Institute not affiliated with the Social Security Administration (“SSA”) or any government entity. Information presented is being provided for education purposes, as only the SSA can determine your eligibility or continuing eligibility for benefits, and your ability to manage any benefits received.  Failing to provide the SSA with accurate and timely information for your particular claim could result in denial or loss of social security payment.

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