How to Get the Most of Social Security Benefits

Social Security can be a significant source of income during your retirement years that’s also adjusted for inflation, but the rules are complicated. Knowing when and what to claim is key to being able to maximize this benefit.

“The carrying card is that this is our money,” says Renee Hanson, financial planner at Ameriprise. “This isn’t money that the government is giving us — we paid into a system so maximizing our benefits is prudent financial sense.”

There are different strategies for claiming benefits, and it’s important to figure out what works best for you based on what you’re eligible to receive. Experts suggest first checking what you’re eligible for by contacting the Social Security Administration. In general, you’re able to begin claiming benefits between 62 and 70 years old, if you’ve accumulated 40 credits based on your earnings and years worked.

Here are options to consider when deciding the plan that is best for you.

Delay Your Benefits

“You have the ability to time when you want to receive your benefits,” says Jay Messing, senior director of planning for Wells Fargo Private Bank. Retirees can start taking benefits as early as 62, but the benefit increases 8% per year in delayed retirement credits (DRC) plus any cost of living adjustment until age 70.

If you are eligible to receive $18,000 per year at age 62, for example, without adjusting for inflation, this amount increases to $24,000 at age 66 and $31,680 at age 70. This benefit also has an annual cost of living adjustment that starts at age 62.

There’s a tradeoff to delaying the benefit though. “If you don’t fully need the retirement income and benefit and can afford to wait until age 70, you’ll get a higher benefit, but you’re betting on your longevity,” says Messing.

Pay Back Benefits

“Once you apply for benefits, if you change your mind, you can withdraw your application inside of 12 months and repay your benefits and let them accrue,” says Messing. This is an opportunity to let your benefits accrue if you later realize that you can wait or decide to go back to work.

Voluntarily Suspend

You can suspend benefits after the initial 12 months depending on your age. “Even if you take Social Security before age 66, once you reach age 66, you’re still eligible to file and suspend your benefit and begin accumulating that 8% a year,” says Terry Seaton, certified public accountant in St. Augustine, Florida.

File and Suspend

Married couples can take advantage of spousal benefits while letting their own benefits accrue.

“Each spouse files [at age 66], the higher earner suspends their filing until age 70 and the [other] spouse gets their spousal benefit — 50% of the benefit,” says Michael Eisenberg, a certified public accountant in Los Angeles.

The higher wage earner accrues DRCs and receives a higher Social Security benefit when they start collecting payments at age 70.