Social Security benefits are crucial for the financial well-being of many retirees, making every effort to maximize them a smart move. As of November 2024, the typical retiree receives around $1,925 each month. However, a few strategic steps can potentially increase these monthly payments by several hundred dollars.
One of the simplest methods to enhance your benefit amount is to delay the start of your claims. By holding off past the age of 62, each month adds a bit more to your eventual payment, peaking at age 70.
However, postponing isn’t the sole technique to improve your monthly benefit. There are several other, less commonly known tactics that may increase your earnings more than you anticipate.
#### 1. Apply for Spousal or Divorce Benefits
If you’re married and your spouse qualifies for retirement or disability benefits from Social Security, you might be eligible for spousal benefits, allowing you to collect up to 50% of their full benefit amount.
For those who are divorced, these benefits are still on the table, provided you’re currently unmarried and your previous marriage lasted at least a decade. If your divorce is recent, specifically less than two years old, you’ll have to wait until your ex-spouse starts claiming benefits to collect yours.
These spousal or divorce benefits are accessible regardless of whether you qualify for retirement benefits based on your employment history. However, you won’t receive both benefits if you qualify for your retirement benefit; you’ll get the one that’s higher.
To illustrate, imagine you’re entitled to $800 a month from your retirement benefits, but spousal benefits would give you $1,000 per month. In such a case, Social Security would pay you your $800 first, topped up by $200 from the spousal benefits, totaling $1,000 monthly.
#### 2. Continue Working After Taking Social Security
Working while you’re collecting Social Security can be a dual win: it not only increases your income but might also lead to higher monthly benefits.
If you’re not yet at full retirement age and you have other earnings, your benefits might temporarily be reduced. But don’t worry; these cuts aren’t forever. Once you hit full retirement age, your payments will be recalibrated to compensate for any previously withheld amounts.
For example, in 2025, if you’re under full retirement age and earn more than $23,400 annually, Social Security will deduct $1 for every $2 over that threshold. If you reach full retirement age that year and earn over $62,160, the deduction is $1 for every $3 over the limit.
Your increased payment post-adjustment depends on how much was withheld initially. More income means higher reductions — and consequently, more significant adjustments later.
This plan mainly benefits those already intending to work while receiving Social Security. However, if you’re undecided about re-entering the workforce, the opportunity for larger future checks might make it worth considering.
#### 3. Contribute to a Roth IRA or Roth 401(k)
While saving in a Roth account doesn’t directly boost your Social Security benefits, it can substantially lower your tax liability, letting you hang onto more of your earnings.
Social Security is subject to state and federal taxes. Fortunately, 41 states don’t tax these benefits. Federally, though, taxes are determined by your combined income, which encompasses your adjusted gross income (such as retirement withdrawals), nontaxable interest, and half your annual benefit.
Notably, contributions to Roth accounts don’t factor into combined income. If a significant portion of your savings is nestled in a Roth IRA or Roth 401(k), you might lower your combined income enough to fall into a lower tax category or even sidestep federal taxes on your benefits entirely.
If you’re planning to rely on Social Security in retirement, optimizing your approach can pay off. With these strategies, you can potentially increase your monthly payments and secure a more stable financial future.
