How to Maximize Your Social Security Benefit

Studio shot of social security card and banknotes
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By Harriet Edleson

While many baby boomers know that waiting to claim Social Security benefits can lead to higher monthly payments, few realize the size of the difference if they delay, according to Social Security experts.

"Many people don't understand how important Social Security will be as a part of their income, especially in later years," says Anna Rappaport, chair of the Society of Actuaries Committee on Post Retirement Needs and Risks. Postponing claiming your Social Security is just one way to maximize the amount of money you can receive every month for the rest of your life.

The first step is to educate yourself about what you can expect from Social Security based on how many years you've already worked and how much longer you anticipate working. "Go to and look at your earnings and make sure they're accurate," says Richard Johnson, director of the program on retirement policy at the Urban Institute, a non-partisan research firm. The Social Security Administration sent paper statements until 2011, but now the information is only available to most people online. The SSA calculates your monthly benefit based on the top 35 years you have worked.

Those born between 1943 and 1954 can collect their full benefits at age 66. If you were born in 1955, you can collect at 66 and two months; in 1956, at 66 and four months; in 1957, at 66 and six months; in 1958, at 66 and eight months, and in 1959, at 66 and 10 months, according to the Social Security Administration.

Claiming an early retirement benefit at age 62 will reduce your payments for the rest of your life. If you claim Social Security at 62, then you get just 75 percent of what you would receive each month if you waited until you were 66, or 67 for younger boomers, to claim, Johnson explains. Age 62 is considered early retirement, and is the first time you are eligible to claim Social Security.

People who claim Social Security early get smaller payments over more months versus more money per month, Rappaport says. "You get more money by far if you claim later," she says. Of course, no one knows how long they will live, and can only estimate by considering their current health and how long their parents lived.

Here are more strategies for getting the most from your Social Security check:

Claim later to get a larger benefit amount. Though 62 is one of the most popular times to claim Social Security, waiting makes a difference, and each year you wait increases the amount you will receive each month. For example, if your benefit will be $1,000 at your full retirement age of 66, and you opted to claim your Social Security at 62, your monthly check will be 75 percent of your full benefit amount or $750. %VIRTUAL-article-sponsoredlinks%The amount grows each year based on a formula, so if you postpone from 62 to 63, you get 80 percent of your full benefit amount or $800, then 87 percent or $870 if you wait until 64, and 93 percent or $930 if you wait until you're 65, according to the report, "Deciding When to Claim Social Security" from the Society of Actuaries.

In short, you will receive approximately 5 percent more if you postpone from 62 to 63, 7 percent more if you wait from 63 to 64, 6 percent more if you postpone from 64 to 65, and 7 percent more from 65 to 66, for a total of 25 percent more between age 62 and full retirement, says Angela S. Deppe, author of "It's Your Money! Simple Strategies to Maximize Your Social Security Income."

If you wait past your full retirement age, you'll increase your future Social Security check by approximately 8 percent each year. Using the same numbers, if you were to receive $1,000 at 66, by waiting one year you would receive $1,080 at 67, $1,160 at 68, $1,240 at 69, and $1,320 at age 70. "You suffer the most financially if you take it at 62," Deppe says. "You are penalized more than the benefit you receive if you go past 66."

Though the increase is 8 percent each year from age 66 to 70, the amount is not compounded, Johnson says. Even waiting less than a year longer to claim your benefit makes a difference. "Every month that you delay you get a little extra from age 62 to 70," he adds.

Work longer at a higher income. Since Social Security uses your 35 years with the highest income, you can increase your benefit amount by working extra years at higher income, Rappaport says. Say you're 55 or 60 and you haven't worked 35 years yet, or had a relatively low (or no) income in some years because you took off time to raise your children or care for your aging parents. If you have worked a considerable amount of time in one profession or field, you may be able to re-enter the workplace at a higher salary than you made in the past. When calculating your monthly benefit amount, Social Security adjusts for the change in the average earnings for each year of your 35 top-earning years, Johnson says.

Coordinate when you claim as a couple. If the higher-earning person in the couple claims early, it can significantly lower the amount the surviving spouse receives. It's often better for the higher earner to wait as long as possible and at least to 66, if not to 70. "For four out of every 10 widows past 65, Social Security is all the income they have," Rappaport says. If you're a married couple, one person can claim early and one can claim late, she adds.

Claim later if you're single. If you're able to work, claiming later will give you a higher monthly benefit. This is especially true for women who typically have earned less than their male counterparts, live longer than men and generally have fewer other resources to rely on during the years beyond 70.

Research what you can on your own and find a trusted financial adviser. Look at the role Social Security benefits can play in your future, says James Mahaney, vice president of strategic initiatives at Prudential Financial and co-author of the report, "Innovative Strategies to Help Maximize Social Security Benefits." The Social Security Administration can show you your wages through the years and your expected benefit at 66 and 70 but does not advise on the best time to take your benefit.

"They're not consultants," says Deppe. "They can't give you expert advice on what you should do."

Many people, eager to collect their benefits because they fear the Social Security system is at risk or feel they need the money, claim them at 62 rather than waiting until their full retirement age of 66 or 67 or even until 70. "If you take it at 62 you forfeit a lot of money," Rappaport says.

Because Social Security can be a major part of your retirement funds, deciding when to claim it should not be an afterthought but an essential part of your retirement planning. "We need to shift our thinking," Mahaney says. "Social Security can be income as long as you're going to need it." Make sure you carefully decide when to claim it or you could miss out on higher payments later in life.

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