6 Smart Ways to Boost Your Social Security Payout Before Retirement

By Damian Davila on 12 October 2016 3 comments

According to the Employee Benefit Research Institute, 84% of U.S. workers expect their Social Security benefit to be a significant source income during retirement. So, let's plan ahead with these six smart ways to boost that monthly Social Security check before retirement:

1. Check Reported Earnings on Your Social Security Statements

In September 2014, the Social Security Administration (SSA) began mailing Social Security Statements to workers at ages 25, 30, 35, 40, 45, 50, 55, and 60 and over, who aren't yet receiving Social Security benefits and don't have a my Social Security account. You should receive those statements about three months before your birthday at each one of those ages.

Once you receive one, check your reported earnings for each year to make sure they match your W-2 forms. The SSA uses your average earnings over your lifetime to calculate your benefit amount, so any errors on reported earnings may alter the benefit to which you're entitled. Since you may have many employers during your lifetime, you're the only person who can look at your earnings history and know whether it's complete and correct.

If any earnings before the previous year are missing or shown incorrectly, contact the SSA right away at 1-800-772-1213 (7 a.m. to 7 p.m. on your local time). Have your W-2 or tax return for those years available when you call.

2. Sign Up for a my Social Security Account

There's no need to wait five years before getting your next Social Security Statement. By creating you're my Social Security account at www.ssa.gov/myaccount, you'll be able to check your reported earnings once a year to verify that those posted amounts are correct.

Additionally, you'll receive updated estimates of your future retirement, disability, and survivors benefits. If you meet certain requirements, you'll also be able to request a replacement Social Security card through the my Social Security online portal.

3. Reach Full Retirement Age

When you have earned the necessary 40 credits (individuals with disabilities, recipients of survivor benefits, and some minors may need fewer credits) to qualify for retirement benefits, you can start receiving those benefits as early as age 62. Whether you receive a digital or paper copy of your Social Security statement, you'll receive an estimated benefit of your retirement benefits at age 62.

You'll quickly realize that the estimated benefit at age 62 is much lower than the one at your full retirement age. For example, if you were born between 1943 and 1954, your full retirement age would be 66. If you were to start getting retirement benefits at age 62, they would be reduced to 75% of what they would be four years later. For every month that you delay retirement past age 62, you would gain an additional 0.4% in retirement benefits until you reach your full retirement age. Depending on your birth year, your full retirement age ranges from 65 to 67.

4. Obtain Delayed Retirement Credits

According to estimates from the SSA, about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. If you have a family history of longevity, consider delaying retirement until age 70.

Individuals born 1943 or later receive an extra 2/3 of 1% increase on their retirement benefits for every month that they delay retirement past full retirement age. If your full retirement age were 67, you would increase your retirement benefit to 132% by waiting until age 70. You can only gain delayed retirement credits until age 70.

5. Evaluate Spousal Benefits

Spouses can claim retirement benefits based on their own earnings record or receive up to 50% of the higher earner's benefit, whichever is higher. For example, if your own retirement benefit and your spouse's were $600 and $1,800, respectively, you would receive $900 (50% of $1,800).

However, taking the spousal benefit as early as age 62 reduces your payout. A spousal benefit is reduced 25/36 of 1% for each month before full retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of 1% per month. For those born 1960 or later, a $900 spousal benefit would be reduced to $585 when taking it at age 62.

If you're divorced from a marriage lasting 10 years or longer, remain unmarried, and have a retirement benefit smaller than the one you would receive from your ex-spouse, then you can receive spousal benefits on your ex-spouse's record even if he or she has remarried. However, you'll only be able to keep collecting benefits if you keep single. To learn more details about spousal benefits for divorced spouses, consult the SSA website.

6. Plan Ahead With Your Dependents

Talking about relationship updates later on in life, keep in mind that you can receive additional Social Security payments when you have dependent children under age 19 living with you during retirement.

As long as your biological child, adopted child, stepchild, or dependent grandchild is unmarried and under age 18, then he or she can receive up to one half of your monthly retirement benefit. The benefit can extend until graduation date or two months after the 19th birthday of a dependent who is a full-time student (no higher than grade 12), whichever is earlier.

While each one of your qualifying dependent children can receive a benefit, generally the total amount you and your family can receive is about 150% to 180% of your full retirement benefit. Depending on your child's age, you may find it advantageous to retire earlier than you originally planned to take advantage of a higher total family benefit.

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Guest's picture
Jonathan Dyer

Very interesting info. I was actually not aware of the "My Social Security" account but I will definitely have to sign up now. Thanks!

Damian Davila's picture

You're welcome Jonathan. Getting your statement every year instead of every 5 years or so, really helps to double check that the earning on your statement and your W-2 match every year.

Guest's picture
John Dailey

Damian,

I have (2) children who will be under the age of 19 when I retire at 62. You mentioned that a child can get between 150% and 180% of your full retirement benefit.

Does that mean I use 66.8 or 62 because I am looking to retire early? Does their mother receive any benefit?

Thanks.