How to Increase Your Social Security Benefits

Couple looking at documents
••• Pascal Broze

You can take actions that will increase the amount of Social Security you will receive. They may not always be the actions you want to take, but as Social Security provides guaranteed income that will increase with inflation, even a small increase in your initial benefit will result in a proportionately larger benefit each year in your retirement. Here are four ways you may be able to boost your benefits.

Coordinate With Your Spouse

If you are married, you and your spouse need to look at your Social Security decision as a team. By having one of you wait until age 70 to begin benefits, you can increase the survivor benefit available. Likewise, if one of you reached age 62 on or before January 1, 2016, then you may be able to use a filing strategy called a restricted application to collect spousal benefits for a few years, then you would switch over to your own benefit amount when you reach 70. Married couples who coordinate their Social Security claiming options are likely to get more benefits than those who don't.

If you aren't married, but you were in the past (for at least 10 years) you may have the ability to file for spousal benefits and be eligible for a widow/widower benefit if your ex-spouse is deceased. Too many divorcees are not aware of their benefit options based on an ex-spouse's earnings record. Examine all your choices so you can claim in a way that gives you the most over your lifetime.

Have the Required Work History

Social Security uses your highest 35 years of work history to calculate what is called your average indexed monthly earnings (AIME). This number is used to determine your final Social Security retirement benefit. As this calculation is based on an average if you have a zero as one of the numbers, it will pull the average down. To increase your Social Security benefits make sure you have a full 35 years of work history.

Use Delayed Retirement Credits

If you want to increase your Social Security retirement income by 25% or more, wait to apply for benefits until age 70 and you will accumulate delayed retirement credits. These credits apply because, once you reach full retirement age (FRA), your benefits do not cap out. FRA is determined by your date of birth. It is age 67 for anyone born in 1960 or later and is a bit younger for those born before 1960. For each year after FRA that you delay taking benefits, you will accumulate a permanent increase in your benefits of 5% to 8% per year. There is no benefit to waiting past age 70 to file, as these increases do not continue past that point, but they do apply up until then.

Max Out Earnings

Not surprisingly, the higher your earnings, the greater your retirement benefit will be, up to a point. Earnings over the annual limit ($127,200 in 2017 and indexed to inflation each year) are not considered in your benefit calculation. If you are under the limit, find ways to invest in your career and earn more. This will have many positive benefits, one of which will be to increase the amount of Social Security you'll get.

Doing the Math

There are many online Social Security calculators that crunch the numbers and project your future benefits. You can use them to see how different choices may impact your benefit amount. As you approach retirement, you'll want to incorporate your benefit amount into a retirement income plan that includes your assets, expenses, and other sources of income so you get a good picture of what your retirement finances will look like.