From The Certified Elder Law Attorney's Desk:

William W. “Bill” Erhart

Ways to Maximize Social Security Benefits

Social Security payments are determined by a number of factors: the amount of money you earn and amount you pay into the Social Security system, the age at which you begin taking benefits, marital status, how long you work, disability status and other factors. There are a number of ways to increase what you receive from Social Security. Not all of these methods will be applicable to everyone or even practical but consider them nonetheless.

Work for at least 35 years

The Social Security Administration calculates payments using taxpayer’s 35 highest earning years. People who do not work for 35 years or more can have significantly reduced payments.

Earn a higher salary

The more you earn and pay into Social Security the larger your benefit. However, each year there is a taxable maximum income. For example, in 2020 the taxable maximum was $135,700. Earnings above the taxable maximum are not subject to Social Security taxes and they are not used to calculate Social Security benefits. Naturally, if you are earning more now than earlier in your work life, working an extra year will increase your benefit.

Wait until Full Retirement Age before claiming Social Security

For people born in 1960 later, the Full Retirement Age (“FRA”) is 67. If you were born before 1960 the FRA is a sliding scale from age 66, graduating increasing each year from 1954 to 1960. Taking benefits before FRA, such as age 62, can significantly reduce your monthly benefit. Taking benefits at age 62 lowers your monthly payments by 25% if your FRA is age 66. If your FRA is 67, taking benefits at age 62 lowers your monthly benefit by 30%.

Wait until age 70 to claim Social Security

Those who delay claiming benefits until they reach age 70, accrue credits that increase their monthly payment by 8 % for each year they wait beyond the FRA or 2/3 % each month. There is no increase after age 70, so naturally one will claim benefits at age 70.

Suspend your Social Security payments

If you already started taking reduced Social Security benefits it is possible to suspend benefit payments and increase your monthly benefit in the future. This permits your benefits to increase by 8% for each year that benefits are suspended until age 70. This can add as much as 32% to your payments if you suspend payments for 4 years.

Reimburse Social Security for benefits you have already received

You can withdraw your application for Social Security benefits within twelve months from the date you first signed up for benefits. You will have to repay the benefits you received. This seems impractical, but by doing this and reapplying for benefits in the future, your monthly benefits will be larger because you delay taking them. This is applicable if one takes Social Security benefits early because of an illness or other perceived crisis, which resolves within the twelve-month period.

Possible Spousal Benefits

Married individuals can claim Social Security payments up to 50% of their spouse’s benefit if that amount is larger than their own benefit. You must apply for spousal payments at your FRA to get the full 50%. Spousal benefits are reduced if you claim them before FRA, just like other benefits. Also, ex-spouses are eligible for spousal payments if the marriage lasted ten years or longer. Many divorced individuals are surprised to learn this. This has no effect on the other ex-spouse’s benefit.

Survivor Benefits

With married couples, when one spouse dies, the surviving spouse can receive the deceased spouse’s Social Security payment if that payment is higher than the surviving spouse’s own monthly payment. As pointed out earlier, married couples can boost the possible surviving spouse’s future benefit by having the higher earning spouse delay taking his or her Social Security benefits past the FRA.

Claim survivor benefits for children

Children of deceased workers can qualify for Social Security benefits until they turn 18 (or age 19 if the child is still a full-time high school student). In addition, a widow (er) who is caring for a dependent child under the age of 16 or caring for a child with a disability which occurred before age 22, can qualify for payments.

Try to estimate how long you may live

When to take Social Security benefits depends on a number of factors, chief of which may be whether one can afford to wait until FRA or age 70 to apply for benefits. Another factor is likely longevity. If one has a serious health issue or there is a history of early death in the family, it may make sense to apply for benefits as soon as possible. If one is healthy and longevity runs in the family, one may want to wait as long as possible to apply for benefits and therefore maximize monthly benefits.

One of the sad things we see in our practice are elderly widows whose husbands apply for Social Security benefits early and then pass away, leaving her with a relatively small income as she ages. Careful consideration must be given when applying for benefits, as things do not always work out the way we hope they will.