It is among our natural instinct to want to maximize anything that is beneficial or rewarding to us. Social Security benefit is definitely one of those resources where we want to exploit fully.
There are specific strategies to increase your social security benefit.
Purchase An Inflation Adjusted Government Insured Annuity: If you started to collect social security benefit early, this method could increase your monthly benefit by 50%. This strategy only works if you have obtained social security benefit before the full retirement age, financial assets to pay back the benefit collected so far, and a long life expectancy. After you have repaid the benefits, you can immediately apply again, and receive a higher benefit level. However, if you die after you repaid the benefits, you would have a loss. The best time to pay back the benefits is right before you turn 70 years old. The U.S. Government’s annuity is the best inflation adjusted government insured annuity.
Work For 35 Years: Social security uses your highest 35 years of work as the base to calculate your social security benefit, so make sure you do have 35 years of work experience. The base is similar to the concept of average. Any 0s would bring down the average, and consequently your potential benefit. So, any level of income is always better than no income. This method only works if you have less than 35 years of work experience, or you have low income in the past 35 years, and you are able to continue working in order to let your higher income replace some of the lower income in the past. The greater the amount of money you make before retirement, you more benefits you will have. However, incomes that are over the annual earnings limit are not taken into consideration. To calculate your potential benefit on your own, the social security government website has available online calculators for you to use.
Delay The Collection Date: You can increase your social security benefit by 25% when you postpone the date to collect benefits until age 70. For each year after your full retirement age that you push back on collecting your benefit, there would be an increase of benefit from 5% to 8% (depending on your birth year). The chart below highlights the different rates of increase (source: www.socialsecurity.gov).
Year of Birth
Yearly Rate of Increase
Monthly Rate of Increase
1933-1934
5.5%
11/24 of 1%
1935-1936
6.0%
1/2 of 1%
1937-1938
6.5%
13/24 of 1%
1939-1940
7.0%
7/12 of 1%
1941-1942
7.5%
5/8 of 1%
1943 or later
8.0%
2/3 of 1%
Note: If you were born on January 1st, you should refer to the rate increase from the previous year.
This strategy only works if you are extremely healthy and have a life expectancy that is longer than the average.
Collect A Spousal Benefit Before Your Own Benefit: This method only works if you and your spouse both have reached the full age of retirement, and your spouse has applied for social security benefits. If you apply for social security once you have reached or reached beyond the full retirement age, you have the opportunity to start taking a spousal benefit based on your spouse’s earnings (or ex-spouse if you two have been married for at least ten years). Your own social security benefit would continue to obtain credits until you reach age 70. To learn more about spousal benefit, please read The Social Security Spouse Benefit.
Caution:If either you or your spouse has not reached the full retirement age, there could be a reduction in your social security benefit due to early application.
ural instinct to want to maximize anything that is beneficial or rewarding to us. Social Security benefit is definitely one of those resources where we want to exploit fully. 