Three Social Security Strategies for Larger Payments

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Prepare to enjoy a larger monthly paycheck for the rest of your life.
There’s a reason why seniors are often advised not to rely on Social Security too heavily in retirement. If you’re a middle-income earner, those benefits will replace roughly 40% of your pre-retirement earnings. However, most seniors require roughly twice that amount of income to live comfortably, implying that Social Security alone will not suffice.

Having said that, there are steps you can take to increase your Social Security benefits. Here are a few strategies you can use to keep getting bigger checks for the rest of your life.

 

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1. Extend your career after your earnings have peaked.

All seniors do not receive the same monthly benefit from Social Security. Rather, the amount of money you’re entitled to is determined by how much you earn during your 35 highest-paid years of employment.

If you don’t have a full 35 years of experience, it may be worthwhile to advance your career. You’ll have $0 factored into your benefit calculation for each year in the top 35 where you don’t have an income history.

Even if you have a 35-year work history, it may be worthwhile to extend your career once you have reached your peak earnings. As a result, you can replace a few years of lower income with years of higher income, increasing your benefit.

2. Delay filing until you are 70 years old.

Once you reach full retirement age (FRA), you are entitled to your full monthly benefit based on your earnings history. FRA is determined by your birth year, which is either 66, 67, or somewhere in between (meaning, 66 and a specific number of months).

However, for each month you delay filing past FRA, your benefit increases slightly. Holding off for a few months won’t make much of a difference, but holding off for a few years might.

In fact, you can earn delayed retirement credits by deferring filing for benefits until the age of 70. In addition, for each full year you postpone filing, your benefit increases by 8%. If your FRA is 67 and you wait until the age of 70 to apply for Social Security, you will receive a 24% increase for the rest of your life.

 

3. Increase your earnings by taking on a second job.

It’s a common misconception that only salaried wages qualify for Social Security. If you have a side job that pays taxes, such as driving for a ride-hailing service, walking dogs, or telemarketing, that income counts toward calculating your future benefit. So, if you’re not getting consistent raises at your main job, consider taking on a side job.

Incidentally, holding down a second job could make it easier to free up cash for retirement savings purposes. And, while there are clearly steps you can take to increase your Social Security income, even with an increased monthly benefit, it still pays to bring as much money as you can into retirement.

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Don’t accept less.

When you retire, Social Security may become an important source of income. If you’re willing to make some sacrifices, you can set yourself up for a higher benefit – and the financial freedom that comes with it – with careful planning.

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