6 Ways to Maximize Your Social Security Benefit Payment

Add thousands to your annual income with these easy strategies

For most people in their sixties, reaching the age to claim social security benefits is a big milestone. Traditionally, the age of 66 or 67 is when we leave our old lives behind for the adventure that is retirement.

And why not? After all, that monthly social security check is the result of a lifetime of your hard work and diligence.

But as enticing as it may be, it’s not always in your best interest to claim early.  If you are married, still employed, or financially stable, then waiting can help you win big. In fact, waiting until you are 70 to claim your benefit can earn you thousands of dollars a year in retirement.

With this in mind, here are 6 easy strategies for maximizing your social security benefit:

1.) Know Your Full Retirement Age (FRA) (& wait for it)

Social security payments are calculated based on an individual’s a.) earning history and b.) age when claiming benefits.

The earliest you can claim social security is 62 (or 50 if you have a disability). However, your benefit will not reach its full amount until you reach your full retirement age (FRA). Depending on which year you were born, this is either 66, 67, or somewhere in-between.

Unless you have significant medical issues, financial troubles, or have reason to think you will die early, you should wait until you reach FRA to claim benefits. Claiming early might seem enticing, but your benefit amount will be permanently reduced. In the long run, you’ll be losing a lot of money.

2.) Take a “do-over” on claiming your benefits

If you’ve claimed social security before reaching your FRA and you are having second thoughts, there is a solution. If you are still within 12 months from claiming, you can withdraw your application and re-start at a later date. This will allow you to take advantage of the higher payouts that come after FRA, and the additional increases of waiting even longer.

If you withdraw your benefits application, you will have to pay back any received benefits, or your benefit decrease will remain permanent.

3.) Suspend your benefits once you hit FRA

If you have claimed your benefits before full retirement age, it is still possible to increase your benefit. Once you turn 66 (or your specific FRA), you can choose to suspend your benefit. After that, your benefit will earn a delayed retirement credit of 8% per year.

Then you can re-claim your benefits when you turn 70. Your monthly payment will be 32% higher than before, which could be enough to wipe out the reductions you took from claiming early.

As an example, consider a primary benefit amount of $2,000. This is the amount guaranteed to you if you claim at full retirement age. But if you wait a few more years, that payment could be increased to $2,640. This added income could be a game-changer when it comes to your retirement plans.

4.) Secure a bigger survivor’s benefit for your spouse

For married couples, coordinating the timing of your social security benefits could generate significant savings over time.

Consider a married couple in their early sixties. If the husband chooses to wait until 70 to claim benefits, then the monthly payments will be significantly increased. In addition, the survivor’s benefit will be increased by the same amount.

This means that if the husband dies first (which is statistically the case) then the wife will continue to receive her husband’s increased payments, as opposed to his base-level primary insurance amount.

In any case, it is the higher earning spouse that should wait to claim benefits, as the primary benefit amount is based on wage history.

5.) Claim a spousal benefit (while you wait for a full benefit)

But it isn’t always financially possible for both the husband and wife to wait until 70 to claim benefits. For many married couples, claiming a spousal benefit can create add monthly income while you wait.

In the above example where the husband waits until 70 to claim benefits, the wife could claim her benefits at 62 or 63. Even though this is before she has reached her FRA, it would create significant income for the next six or seven years.

In this example, the husband would also be able to claim a spousal benefit. This is a smaller monthly payment that is usually about half the amount of the spouse’s primary benefit. So even if the wife’s benefit was only $1,000 a month, the husband could receive a spousal benefit of $500.

Then, when the husband reaches full retirement age, he can claim his increased benefit and his wife can switch to a spousal benefit.

Unfortunately, this method is being phased out and is only available to people who were born on or before January 1st, 1954.  

6.) Talk to a professional advisor about your retirement strategy

Your Personal Benefits Manager can be your strategy partner for social security, Medicare, and overall wellness in retirement. Call today, or click here to schedule a free consult.

To your health and wealth,

Wiley P. Long, III
President – MediGap Advisors