Three Social Security Strategies for Larger Payments


Understanding how Social Security works can make all the difference.

For many people, Social Security is an important source of retirement income. Regrettably, the rules governing this benefits program can be extremely difficult to understand. Indeed, many future retirees are perplexed by the details and unsure of how to maximize their monthly checks.


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The good news is that you only need to know three Social Security secrets to get the largest possible check. Here’s a list of them.

1. The amount of your check is affected by your age when you apply for benefits.

One of the most important things to understand about Social Security is that the date you receive your first check determines how much money you receive each month.

You have a full retirement age based on when you were born (FRA). It’s between 66 and four months old and weighs 67 pounds. If you begin receiving checks at the exact FRA, you will receive your primary insurance amount (PIA). However, you have the option of claiming benefits before or after the event. Your primary insurance amount will be adjusted as a result.

A monthly early filing penalty applies if you begin your benefit before FRA. It is 5/9 of 1 percent for the first 36 months and 5/12 of 1 percent for each month before that. So, if you claim your benefit at 66 with a FRA of 67, you’ll face a 12-month penalty of 5/9 of 1% per month. This would result in a 6.7 percent reduction in benefits. However, if you started checks at 62 and had a FRA of 67, you’d face 36 months of penalties that reduced your benefit by 5/9 of 1% per month, followed by another 24 months of penalties that reduced it by 5/12 of 1% per month. This would result in a 30% reduction in benefits.

If you wait until after FRA, you can earn delayed retirement credits every month until you reach the age of 70. These increase your primary benefit by 2/3 of 1% per month. You get 12 months of credits for every year you wait, for a total annual benefit increase of 8%.

You’ll want to understand your FRA as well as how early filing penalties and delayed retirement credits work so you can decide whether you want to delay beginning your benefits in exchange for a larger check.

2. Your earnings over the course of your career do as well.

So you now know that your age at the time you claim benefits influences your primary insurance amount, also known as your standard benefit. However, you must also understand how your PIA is calculated.

It is based on the average income. The Social Security Administration adjusts your wages for inflation, calculates your average earnings, and pays you benefits based on a percentage of your average wage. You will receive the following benefits:

  • 90% of income up to a “bend point” (an income threshold that changes annually).
  • 32 percent of income between the first and second bend points
  • 15% of earnings above the second bend point

A quick glance at this formula reveals that lower-income earners receive benefits that are a larger percentage of their total income. Higher-earning individuals, on the other hand, see less of their pre-retirement money replaced. In addition, there is an annual upper income limit known as the “wage base limit.” Anything earned above the wage base limit is not taken into account when calculating your benefit. As a result, those who earn a lot of money may receive Social Security benefits that are very low in comparison to what they earn each year.

3. The number of years you have worked is also important.

Finally, the length of your work history has a significant impact on the size of your Social Security check. This is due to the fact that the Social Security Administration always considers your 35 highest earning years when calculating your average wage. This is true no matter how long you worked.

If you work for more than 35 years, your lowest earning years will not be considered when calculating your benefits. Years in which you earned an entry-level salary will not lower your average, nor will any other years in which you did not earn much.

However, if you work exactly 35 years, every year you earn a paycheck will be included in your average wage calculation, even if your take-home pay is low. Years of $0 wages become part of your average even if you haven’t reached the age of 35.


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Because you’ll want the highest average wage possible when calculating your primary insurance amount, putting in some extra years can pay off, especially if your salary has increased over time after adjusting for inflation. Working for more than 35 years, maxing out your earnings, and planning when to receive your first Social Security check can result in a much larger monthly payment to help you in your later years.

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