4 Ways to Get the Most From Social Security


4 Ways to Get the Most From Social SecurityThe first thought most people have about Social Security these days is that it won't be there to pay them by the time they retire. But if you wait until your 60s to figure out the ins and outs of your retirement benefits, it'll be too late to do anything to change them, regardless of what happens to the program in future years.

Taking action now can help you boost your benefits. To get as much money as you can from Social Security, here are four things to do:

1. Earn as Much as You Can

Your Social Security benefits are primarily based on how much money you earn throughout your career. To calculate your benefit, the government takes your 35 highest-earning years, makes some adjustments, and then figures out what your average monthly earnings were.

It then applies a formula to that average to figure out what's called a primary insurance amount. That number represents what you'll get if you start taking payments at your normal retirement age -- currently 66 for those born between 1943 and 1954.

But the formula doesn't reward every dollar of earnings equally:

  • For low-wage earners, the formula gives you about $0.90 for every dollar of average earnings.
  • Above a certain point, though, middle-income workers will only get about $0.32 extra for every dollar of additional earnings.
  • For high-income earners, the extra benefit falls to $0.15 on the dollar.

What that means is that while earning more is always good for your benefits, some earnings will help more than others. If you have a number of low- or no-income years in your career, working extra could help boost your benefits. But if you already have 35 well-paid years in your history, working more might not do you any good.

2. Wait -- If You Can

Another simple way to boost your benefits is to wait as long as you can before taking them. Doing so can make a huge difference in your monthly check.

For instance, if your normal retirement age is 66 but you retire four years early at age 62, the government will cut your monthly benefit by 25%. Moreover, your spouse's benefits will take a 30% hit.

On the other hand, if you work beyond age 66, the government gives you even more benefits. For each year you work beyond normal retirement, your benefits rise about 8%. And you can wait as long as age 70 and still get added benefits.

So on a monthly benefit of $1,000 at age 66, retiring early versus late can mean the difference between $750 and more than $1,300. That's a nice reward to encourage you to wait.

3. If You're Married, Look at Your Spousal Benefits

Many families have two wage-earners. Because married couples can collect Social Security based either on their own earnings or their spouse's earnings, you may have an opportunity to boost your total payments.

Ordinarily, the government will figure out which benefit is higher and just pay you the greater amount. But one thing you can do is to delay taking your own benefits but take your spousal benefits. By doing so, you both get paid now as well as earning the extra benefit credits from waiting on your own benefits.

4. Watch the Work Rules

If you're collecting Social Security but also working, be careful. If you earn too much, you could end up forfeiting some of your monthly benefit check.

From age 62 until your normal retirement age, any earnings above a certain limit -- just over $14,000 for 2011 -- cut your total benefits for the year by $1 for every $2 you go over the limit. A higher limit applies during the year you reach normal retirement. Then after that, you're home free and can work as much as you want while also taking benefits.

Some things about Social Security are beyond your control. But by keeping these simple ideas in mind, you can make the most of whatever Social Security gives you after you retire.

Motley Fool contributor Dan Caplinger is always looking for ways to give you more. You can follow him on Twitter here.

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It would seem to me that a simple % increase in Social Security would increase the time. Why is it that everyone pays a flat percentage and not different people pay a different percentage. I could never understand why this does not happen. If I pay 90 cents on the dollar for low income, why would I not (high income) pay the same(for example) SS tax, why do we stop paying social security tax after we make x number of dollars. Everyone needs to pay continually. If I am low income I pay every year, but if I am high income $200,000. I stop paying until the following year when I reach the maximun detuctions, and that could be in 6 months? The way it is figured doesn't make sense. I realize if you make less you are going to make less, but all as far as having it taken out of the check you earn should pay the same and not the poor or the middle class continue paying while I will not have to pay after 6 months. It goes into a savings and if the government would keep their hands off of it or at least pay it back and the includes the Democrates as well as the Republicans, THEY are all guilty. Maybe they should live on Social Security.

February 15 2012 at 7:47 PM Report abuse rate up rate down Reply

From above item 2. I was terminated in October 08, took early retirement to help make ends meet, and have been hit with the SSI issues, have not had the best IRA growth the past 2. Will try for disability as a recent hospital emergency discovered, CHF, Pulminary and heart issues, strict diet of no sodium, and back pain issues. I am told that the back problems, CHF and pulminary issues are very critical, how will the SSI look at the issues.

December 26 2011 at 3:43 PM Report abuse rate up rate down Reply

Good advice look to your spouse, especially if you are both working. If one continues to work at full retirement age don't collect, use your spouses benefit--you are entitled to almost half of his benefits and let your to continue to accumuluate. then when you retire you will have a much larger monthly payment coming to you.

December 18 2011 at 12:15 PM Report abuse rate up rate down Reply

FDR said, " I've got a retirement plan that's hot
but you can participate or not."
Dems said, " No!! You'll pay and your boss will, too.
("We'll get that dough before we're through.")
Johnson said, "Tax it and put it in the general fund.
We couldn't get more if we had a gun."
Carter said, "Look at all that money in there.
Poor immigrants should have a share."

Dems took that money on a spending spree
and blamed it on the GOP !

December 16 2011 at 7:55 PM Report abuse +5 rate up rate down Reply
Bill & Darlene

pennison wildfall tax i loss 40 to 60% of my social securty

December 16 2011 at 1:48 PM Report abuse +4 rate up rate down Reply

I RETIRE.at 48 due to healt pob.i get $1.300.64 a month.home is paid for.kids grown up.divorce.2005 car paid off.not liveing the rich life .but i get more then other.t/g

December 16 2011 at 1:29 PM Report abuse +1 rate up rate down Reply
1 reply to MONSTERDEADHEAD's comment

Worked 35 years, and do not get as much money per month as you! Where did I go wrong?

December 16 2011 at 10:11 PM Report abuse rate up rate down Reply
1 reply to gmydogbud's comment

The disabled always get more even if they haven't paid in a lot.

December 16 2011 at 10:19 PM Report abuse rate up rate down

Does anyone know if married couples who are both employed for 35 plus years get both their benefits at retirement. The article seems to indicate you only get one. I thought the benefit of taking one early was to increase the second one so that right of survivalship got the surviving spouse more money when the other dies. If it's just a one or the other that changes everything.

December 16 2011 at 12:53 PM Report abuse rate up rate down Reply
4 replies to familyeldredge's comment
Susan Azia

Social Security is not failing and will be here long after the tea party and the republicans out for the millionaires only. Social security can be fixed by raising the maximum amount people pay social security on. Also it is time to put all federal employees on social security and medicare especially Congress and the president. The growing distance between the average american and the rich will destoy this country.

December 16 2011 at 12:13 PM Report abuse +4 rate up rate down Reply
2 replies to Susan Azia's comment


December 16 2011 at 7:49 PM Report abuse +1 rate up rate down Reply

With Respect: Social Security, can be fixed by REQUIRING - All Presidents & All Members Of Congress To Return The Money They Have Taken From The Social Security Fund! They Had/Have A Fiduciary Duty To Protect OUR RETIREMENT MONEY & They Have Spent & Are Spending It On Their Brain Storms!

December 16 2011 at 10:18 PM Report abuse +4 rate up rate down Reply
1 reply to gmydogbud's comment

LOL. Like they are going to make themselves do that.

December 19 2011 at 4:57 PM Report abuse +1 rate up rate down
Susan Azia

Social Security will be here long after the tea party and some of the republicans out for only the rich. 55 million people strong will make it difficult to steal their money. It is time to get rid of bush's tax cuts for millionaires and stop the nonense that they create jobs. They dont. Jobs are created by average americans having money to spend here. The growing distance between average americans and the super rich will destroy our country.

December 16 2011 at 12:10 PM Report abuse -2 rate up rate down Reply
3 replies to Susan Azia's comment

I click on the "thumbs up", and it deducts a point. What's up with that???

December 16 2011 at 11:59 AM Report abuse +3 rate up rate down Reply