3 Social Security Secrets for Even Bigger Checks

3 Social Security Secrets For Even Bigger Checks

Ideally, Social Security won’t be your only income source in retirement, but rather one of several. Still, it pays to get as much money as you can out of the program, especially since it’s supposed to keep paying you for the rest of your life. If you’re eager to score a higher benefit, here are a few tactics to employ.

1. Extend your career once your earnings peak

Some people assume that Social Security pays a single universal benefit and that everyone gets the same amount each month in retirement. Not so.

Benefits are calculated for each individual: namely, based on the amount you earn during your 35 highest-paid years in the workforce. Now you may reach a point in, say, your 60s where you’re looking to retire but you’re also earning a lot more money than you did in your 30s, 40s, or 50s.

If you extend your career a few more years, you can replace some years of lower earnings with higher ones. The result? A more generous benefit to enjoy throughout retirement.

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2. Move to a state that doesn’t tax benefits

Whether you’ll be taxed on Social Security benefits at the federal level depends on how much income you have outside of those benefits. For example, generous withdrawals from a traditional retirement account like a 401(k) plan could make it so you pay federal taxes on Social Security. But the state you retire in will also impact how much of your benefits you lose to taxes.

There are 13 states that impose a tax on Social Security:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

Avoiding these states could help you keep more of that money. Of course, some of these states do offer exemptions for low- or even middle-income seniors, so don’t write them off right away. Rather, do your research if any of these states are on your retirement list.

3. Delay filing as long as possible

You’re entitled to your full monthly Social Security benefit based on your earnings history once you reach full retirement age, or FRA, which is 67 for anyone born in 1960 or later. If you were born earlier, FRA is 66, or 66 and a specific number of months.

You are, however, allowed to delay your filing past FRA, and for each month you do, your benefits will increase by two-thirds of 1%. All told, that’s an 8% boost for each year you hold off.

Once you turn 70, you can no longer grow your Social Security benefits. But if you’re looking at an FRA of 67 and you wait until 70 to sign up, you’ll give your benefits a sweet 24% increase.

The more you learn about Social Security, the easier it’ll be to find ways to snag a higher benefit. Keep educating yourself about the program, even if retirement is many years away, so you can set yourself up to collect more money for life.

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