Want to get the most out of your Social Security benefits? Smart decisions about when and how to claim can increase your lifetime income significantly. For example, delaying your claim until age 70 could increase your monthly payments by up to 32%. Additionally, managing your earnings record and taxes can further maximize your benefits. Here’s a quick overview of the eight key strategies:
- Know Your Full Retirement Age (FRA): Understand how claiming early or late affects your payments.
- Delay Benefits: Waiting past FRA increases payments by about 8% per year until age 70.
- Build Your 35-Year Earnings Record: Ensure you've worked at least 35 years to avoid zero-earning years lowering your benefits.
- Spousal Benefits: Coordinate with your partner to maximize household income.
- Plan Survivor Benefits: Secure income for your spouse after your passing.
- Lower Taxes: Use strategies like Roth conversions to reduce taxes on your benefits.
- Balance Work and Benefits: Avoid benefit reductions by staying within income limits before FRA.
- Check Your Earnings Record: Verify your Social Security records for accuracy to avoid missing out on money.
Each strategy can help you optimize your Social Security income and secure your financial future. Let’s explore these approaches in detail.
How to Maximize Social Security Benefits
1. Know Your Full Retirement Age
Your Full Retirement Age (FRA) depends on your birth year and directly affects your Social Security benefits.
The Social Security Administration determines FRA based on when you were born:
| Birth Year | Full Retirement Age (FRA) |
|---|---|
| 1943 - 1954 | 66 Years |
| 1955 | 66 Years, 2 Months |
| 1956 | 66 Years, 4 Months |
| 1957 | 66 Years, 6 Months |
| 1958 | 66 Years, 8 Months |
| 1959 | 66 Years, 10 Months |
| 1960 and later | 67 Years |
Early vs. Late Claims
When you choose to claim Social Security has a big impact on your monthly payments. If you claim benefits at age 62, your monthly amount will be reduced permanently by 25% – 30%, depending on whether your FRA is 66 or 67. On the other hand, delaying your claim past FRA earns you extra credits. These delayed retirement credits increase your payments by 0.66% per month (or 8% per year), maxing out at age 70.
Here’s an example: if your FRA benefit is $2,000 per month, claiming at age 62 could lower it to $1,400. Waiting until age 70 could increase it to about $2,480, depending on your FRA.
Making a well-informed decision about when to claim can help you preserve a large portion of your retirement income. Understanding these options is a key part of building a solid retirement plan.
2. Why Waiting Increases Your Benefits
Monthly Payment Increases After FRA
Delaying your Social Security benefits beyond your Full Retirement Age boosts your monthly payments by 0.66% for each month you wait. That amounts to approximately an 8% increase per year. This growth continues until you turn 70, after which no further credits are added.
For those born in 1960 or later, the increases are as follows: at 67, you receive 100% of your benefit; at 68, it increases to 108%; at 69, it rises to 116%; and at 70, it reaches 124%.
For instance, if your full retirement benefit is $2,000 per month at age 67, delaying until age 70 would raise it to $2,480. That’s an extra $480 every month for the rest of your life.
These increases can lead to significant long-term financial advantages, as explained below.
When Delayed Benefits Pay Off
The decision to delay claiming Social Security can have a considerable effect on your total retirement income. Studies indicate that claiming benefits before turning 70 could reduce lifetime spending by about $182,370 for a median household.
This delay is especially critical when you consider:
- 42% of women and 37% of men rely on Social Security for at least half of their retirement income.
- Benefits claimed at age 70 are 76% higher (adjusted for inflation) than those claimed at age 62.
Factors such as your health, other income sources, the ability to continue working, and your spouse’s strategy for claiming benefits all play a role in determining when to start collecting payments.
"The rich have the most to lose by screwing this decision up. The poor have relatively more to lose because they're more dependent on Social Security." – Larry Kotlikoff [1]
While delaying benefits requires thoughtful financial planning, the guaranteed increase in monthly payments can help cushion against inflation and the risk of outliving your savings. This choice is especially impactful for the 13% of retirees who rely solely on Social Security for their income.
When Delayed Benefits Might Hurt You
Delaying benefits assumes they will be paid as projected – but that may not hold true for everyone. For most Americans, this is a risk worth taking. Unfortunately, for higher-net-worth individuals, this may not be true.
The Social Security system is still projected to be on an unsustainable trajectory, meaning that, under present circumstances, the system does not have sufficient financial resources to pay all the projected benefits to everyone entitled to receive them. Something has to give.
The good news is that the “fixes” for the system are mathematically and economically achievable. They are, however, politically difficult because none of our leaders seem willing to wade into this quagmire. They somewhat jokingly refer to it as “the third rail,” referencing the third rail in subway lines, which can be fatal if anyone touches it.
The simple fixes referenced above include some combination of A) increasing the retirement age further, B) changing the cost of living adjustment formula, and C) means testing the benefit payments. It is the last option that has the most direct impact on your decision.
It may be very likely that at some point in the future, Congress will stipulate that anyone earning over a certain amount will lose a portion of their benefit. For example, they could say that a person earning over a certain amount will receive only 96% of their projected benefit, and perhaps if someone earns even more, they might receive only 90%, and so on. These are hypothetical, as no law has actually been proposed, but the concept has been debated.
If this sort of means testing is implemented, then waiting for an increase in your benefits might not actually allow you to get extra benefits. Politically, it would be more challenging to reduce Social Security benefits for people who are already receiving them than it would be to reduce benefits for those who are not yet receiving them. In such a situation, it might make sense to claim your benefit at your FRA rather than wait.
To delay or not delay is an inherently subjective decision and is based on a subjective determination of whether you might be included in one of those higher income brackets if Congress decides to cut back benefits. We can’t prove that Congress will adopt this approach, but it is worth considering as you decide when to claim benefits.
3. Build Your 35-Year Earnings Record
How Your Benefits Are Calculated
The Social Security Administration (SSA) determines your monthly benefits based on your 35 highest-earning years. This calculation uses your Average Indexed Monthly Earnings (AIME), adjusting past earnings for inflation.
Here’s the formula for 2025 benefit calculations:
| Portion of AIME | Percentage Applied |
|---|---|
| First $1,226 | 90% |
| $1,226 to $7,391 | 32% |
| Above $7,391 | 15% |
Keep in mind that only earnings up to the maximum taxable limit ($176,100 in 2025) count toward your benefits. Understanding how this works reveals why improving your earnings record can make a significant difference.
Improve Your Earnings History
Your benefits depend on your 35 highest-earning years. If you worked fewer than 35 years, zero-earning years are included, which lowers your benefit.
"As long as you are employed for a total of at least 35 years, you likely will get more money from your Social Security benefits. If you take a hiatus for any reason, returning to the workforce later can help cancel out those 'zero years' and raise your baseline." – NCOA [2]
Higher recent earnings automatically replace lower-earning years in your calculation, increasing your monthly benefit. For example, if you earned $30,000 annually in the 1990s (adjusted for inflation) but now earn $80,000, each additional year replaces a lower-earning year, improving your AIME.
Here’s how to strengthen your earnings record:
- Check your earnings history on the SSA’s website.
- Work longer if you have zero or low-earning years.
- Increase your earnings to boost your future benefits.
The SSA’s formula provides proportionally higher benefits to lower-wage earners but still rewards those with higher lifetime earnings. Strengthening your earnings history can directly increase the lifetime value of your Social Security benefits.
4. Plan Social Security Spousal Benefits Together
Rules for Spousal Benefits
Spousal benefits through Social Security can help increase your household’s retirement income. The maximum spousal benefit equals 50% of your spouse’s benefit at their full retirement age.
Here are the key eligibility criteria:
- You must be currently married
- You need to be at least 62 years old
- Your spouse must already be receiving Social Security benefits
| Your Claiming Age | Spousal Benefit (% at FRA 67) |
|---|---|
| 62 | 32.5% |
| 64 | 37.5% |
| 66 | 45.8% |
| 67 | 50.0% |
If you’re eligible for both retirement and spousal benefits, Social Security will automatically pay you the higher amount.
Timing Claims as a Couple
Coordinating when to claim benefits can significantly impact your overall retirement income.
"Maximizing Social Security is a key part of how couples can manage the risk of outliving their savings." – Greg Welborn
Take Aaron and Elaine, for example. Aaron is eligible for $2,000 per month at his full retirement age (FRA) of 67, while Elaine would receive $1,000. By waiting until age 70 to claim, Aaron increases his benefit and Elaine’s potential survivor benefit by 24%, reaching $2,480 monthly. This decision could boost Elaine’s lifetime Social Security benefits by around $80,000 compared to Aaron’s claim at 62.
Here are two scenarios to consider when planning:
- Similar Earnings and Life Expectancy: Willard and Helena, earning $75,000 and $70,000, respectively, would collect $1,060,000 if they claimed at 62. However, by delaying until 70, they could add $260,000 to their lifetime benefits.
- Different Life Expectancies: Carter and Caroline, with life expectancies of 77 and 76 and earnings of $70,000 and $80,000, found it better to claim at 62. This decision added $124,000 to their lifetime benefits compared to waiting until 70.
If you’re eligible for retirement and spouse’s benefits, you must apply for both, and you’ll receive a combined benefit equaling the higher spouse’s amount.
Keep in mind that only retirement benefits grow if you delay claiming. Spousal benefits are capped at your full retirement age (FRA).
Remember, however, that these estimates and scenarios may be significantly altered if Congress decides to implement a means test (as explained above) for Social Security benefits.
5. Plan for Survivor Benefits
Planning for spousal benefits helps ensure a steady income during your lifetime, but organizing survivor benefits is crucial for securing your family’s financial future after a loss.
How Survivor Benefits Work
Social Security survivor benefits provide financial assistance to families after the death of a loved one. To qualify, family members must meet specific criteria. For spouses, eligibility requires being at least 60 years old (or 50-59 if disabled) and having been married for at least nine months before the worker’s death. Divorced spouses may also qualify if the marriage lasted at least 10 years.
If a survivor begins claiming benefits at age 60, the payment is reduced by roughly 28.5%, meaning they receive about 71.5% of the full benefit. Waiting until full retirement age – usually 67 for those born on or after January 2, 1962 – ensures the survivor receives the full benefit amount.
Children can qualify for survivor benefits too, provided they meet certain conditions. These conditions include being unmarried and under 18, between 18 and 19 if enrolled in full-time education, or any age if they became disabled before the age of 22.
Steps to Safeguard Your Spouse’s Income
Using these benefit rules wisely can help protect your spouse’s financial future. For couples aged 65, there is a strong likelihood that at least one spouse will live to be 93 years old.
"Knowing the ins and outs of Social Security is crucial, especially when planning ahead for the partner who’s likely to outlive the other." – Greg Welborn
Take Diane’s situation as an example. When her husband passed away at 57, she had the option to claim $1,791 in retirement benefits or $2,025 in survivor benefits at age 62. By waiting until 66 to claim full benefits and switching to her retirement benefit at 70, she could potentially increase her lifetime income by $200,000.
Here are a few key points to keep in mind:
- Delayed Retirement Credits
Waiting beyond full retirement age to claim benefits, up to age 70, can boost payments by approximately 8% annually, thereby increasing the survivor’s future income. - Working While Claiming Benefits
If you claim benefits before reaching full retirement age and continue working, your benefits may be reduced. - Marriage Rules
Remarrying before age 60 typically disqualifies you from survivor benefits. However, remarrying at 60 or later allows you to keep eligibility based on your deceased spouse’s earnings record.
6. Lower Taxes on Your Benefits
Tax rules for Social Security can impact your retirement income, so it’s important to understand how they work.
When Benefits Are Taxable
Social Security benefits can become taxable based on your combined income. This includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. The thresholds for taxation depend on your filing status:
| Filing Status | 50% Taxable Threshold | 85% Taxable Threshold |
|---|---|---|
| Single/Head of Household | $25,000 - $34,000 | Above $34,000 |
| Married Filing Jointly | $32,000 - $44,000 | Above $44,000 |
| Married Filing Separately | $0 | All income levels |
*If you lived with your spouse at any point during the tax year.
With these thresholds in mind, let’s examine strategies to reduce the taxes on your Social Security benefits.
Strategies to Lower Benefit Taxes
Here are some ways to minimize taxes on your Social Security:
- Strategic Income Distribution: Adjust the timing of Social Security and IRA withdrawals to optimize your financial strategy. For example, a retiree at 67 with $750,000 in an IRA and a $3,000 monthly Social Security benefit could save $12,000 in taxable income by delaying Social Security until age 70 and recalibrating IRA withdrawals.
- Roth Conversions: Converting traditional retirement accounts to Roth IRAs can reduce future taxes. While you’ll pay taxes on the conversion upfront, Roth distributions won’t count toward the combined income that determines Social Security taxation.
- Relying Solely on Social Security: If Social Security is your only income source, your benefits won’t be taxed.
- Tax-Smart Withdrawal Strategy: Manage withdrawals to stay within a lower tax bracket. For instance, consider using Roth accounts to generate extra income while timing traditional IRA withdrawals to manage taxable income.
7. Balance Work and Benefits
This approach focuses on how your work income interacts with Social Security benefits. The effect of your earnings on benefits depends on your age and how much you earn.
Income Limits While Receiving Benefits
For 2025, Social Security has set specific earning thresholds that impact benefits:
| Age Group | Annual Earnings Limit | Benefit Reduction Rate |
|---|---|---|
| Under Full Retirement Age (FRA) | $23,400 | $1 reduced for every $2 earned above the limit |
| Year Reaching FRA | $62,160 | $1 reduced for every $2 earned above the limit |
| At or Above FRA | No limit | No reduction |
These limits apply only to wages and self-employment income. Other sources, such as pensions, investments, or government benefits, are excluded.
For example, if you’re 64, receive $800 a month in benefits ($9,600 per year), and earn $32,320, you’ve exceeded the $23,400 limit by $8,920. With the $1 reduction for every $2 over the limit, your yearly benefits decrease by $4,460.
Now, let’s explore ways to manage your work income alongside Social Security benefits.
Optimize Work and Social Security Income
Here’s how you can make the most of your work income and benefits:
- Keep Track of Your Earnings: If you’re under FRA, report any changes in your income to Social Security.
- Consider Part-Time Work: Adjust your hours to stay below the earnings limit if needed.
- Plan Around FRA: In the year you reach FRA, only earnings before FRA count. For instance, if you earn $69,000 in 2025 and reach FRA in August, only the income from January to July (e.g., $63,000) is considered.
Working while receiving benefits can also increase future payments. Social Security recalculates your benefits annually to account for additional earnings. Use the Social Security Administration’s Retirement Earnings Test Calculator to see how your income might affect your benefits.
8. Check Your Earnings Record
Your Social Security benefits are based on your lifetime earnings, so even small errors in your record can lower your payments. Regularly reviewing your earnings record helps ensure you’re on track.
How Errors Impact Your Benefits
Mistakes in your earnings record can lead to lower monthly payments. For example, missing just one year of earnings could reduce your benefit by about $33 per month.
| Missing Earnings | Monthly Benefit Impact | Annual Loss | 10 Year Loss |
|---|---|---|---|
| 1 Year Missing | - $33 | - $396 | - $3,960 |
| 5 Year Missing | - $158 | - $1,896 | - $18,960 |
In 2022, the Social Security Administration reported $13.6 billion in improper payments, including $11.1 billion in overpayments and $2.5 billion in underpayments. This highlights the importance of monitoring your earnings record.
Steps to Fix Errors in Your Record
1. Access Your Records
Log in or create a My Social Security account to review your earnings history. The SSA sends email reminders three months before your birthday to encourage you to check your records.
2. Look for Common Issues
Pay attention to potential errors like:
- Missing years of work
- Incorrect earnings amounts
- Misspelled names
- Wrong Social Security numbers
- Incorrect employment dates
3. Gather Evidence
Collect documents to support your claim, such as:
- W-2 forms
- Tax returns
- Pay stubs
- Other proof of earnings
4. Report the Errors
If you find an error, please contact the Social Security Administration. You can:
- Call 1-800-772-1213 (TTY 1-800-325-0778)
- Visit a local Social Security office
- Submit corrections online through your My Social Security account
"You're the only person who can look at your lifetime earnings record and verify that it's complete and correct." – Social Secuirty Administration [3]
Quick Recap of Strategies
Social Security serves as the main income source for most Americans aged 65 and older. The strategies outlined earlier can help you create a well-rounded retirement plan. Here’s a quick recap:
| Strategy | Potential Impact | Key Action |
|---|---|---|
| Timing Your Claim | Up to 8% increase per year after FRA |
Calculate you benefits at ages 62, FRA, and 70 |
| Work History | Higher lifetime earnings equal larger benefits |
Complete 35 years of maximum earnings |
| Spousal Planning | Up to 50% of spouse's benefit at FRA |
Coordinate claiming with spouse |
| Tax Management | Reduce benefit taxation | Track combined income thresholds |
To apply these strategies effectively and customize them to your needs, professional advice can make a big difference. Our certified financial planners can:
- Design a personalized claiming strategy
- Evaluate different claiming scenarios to find the best timing
- Coordinate benefits with your spouse
- Offer clear, actionable steps for implementation
At First Financial Consulting, we have over 45 years of experience providing unbiased advice to help our clients make smart Social Security decisions. Take control of your retirement income by scheduling a consultation.
Greg Welborn is a Principal at First Financial Consulting. He has more than 35 years’ experience in providing 100% objective advice, always focusing on the client’s best interests.
Greg Welborn is a Principal at First Financial Consulting. He has more than 35 years’ experience in providing 100% objective advice, always focusing on the client’s best interests.
