Millions of seniors collect Social Security benefits in retirement, some of them relying on their monthly checks for the majority of their income.
While Social Security was never designed to be your primary source of income, it pays to ensure you’re receiving as much as possible. Your benefits can go a long way in retirement, especially if your savings are falling short.
One of the best ways to increase the size of your checks is to delay claiming Social Security. However, there are a few other, less common options that can also help you earn larger monthly payments.
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1. Work at least 35 years
The Social Security Administration calculates your benefit amount by taking an average of your wages over the 35 highest-earning years of your career. That number is then adjusted for inflation, and the result is the amount you’ll receive if you begin claiming at your full retirement age (FRA).
If you’ve worked fewer than 35 years by the time you file, you’ll have zeros included in your average to account for the time you were not working. That will result in a smaller earnings average and less money in benefits.
Even if you have worked a full 35 years already, working a little longer can be beneficial. Chances are you’re earning more now than you were 35 years ago. And because your average is based on your highest-earning years, working an extra year or two when you’re earning more can give you a higher benefit amount.
2. Take advantage of other types of benefits
Retirement benefits aren’t the only type of benefits you might be eligible to receive. In some cases, you could also qualify for spousal benefits, divorce benefits, or survivors benefits.
Spousal and divorce benefits allow you to claim based on your partner or ex-partner’s work record. In both cases, the most you can receive is 50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the amount your spouse or ex-spouse is entitled to at his or her FRA.
If you were financially dependent on a loved one who passed away, you could also qualify for survivors benefits. Although usually reserved for widows and widowers, survivors benefits are also sometimes available to parents, children, divorced spouses, and other family members.
3. Contribute to a Roth account
Your Social Security benefits can be subject to both state and federal taxes in retirement. Your state taxes will depend on where you live, while federal taxes will depend on a factor called your provisional income.
Your provisional income is half of your annual benefit amount, any nontaxable interest, plus your adjusted gross income. If your provisional income is higher than $25,000 per year (or $32,000 per year for married couples filing taxes jointly), you’ll owe taxes on up to 85{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of your benefit amount.
However, withdrawals from Roth accounts — such as a Roth IRA or Roth 401(k) — don’t count toward your provisional income. If you’re withdrawing a significant amount from this type of account, that can potentially lower your provisional income enough to reduce or even eliminate federal taxes — helping you keep a larger chunk of your benefits.
Your benefits can help you afford a more comfortable retirement, and it’s wise to make the most of them. With a few creative strategies, you can squeeze every penny out of Social Security.
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