Social Security benefits: 5 ways to increase your retirement checks

When it comes to preparing for a financially comfortable retirement, you're going to have to plan ahead.

It's important to take advantage of your Social Security benefits, specifically. In order to boost your retirement income, you don't want to collect too early or make any major life decisions without considering the potential financial toll it could have on your savings.

"Social Security is largely a pay-as-you-go program. This means that today's workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries," the National Academy of Social Insurance explains online, adding that roughly 170 million Americans pay Social Security taxes and more than 60 million individuals collect benefits each month.

In 2017, an average retired worker reportedly received nearly $1,400 per month in Social Security benefits. That number fluctuates based on a person's status (i.e. a disabled employee, widow or widower, etc.).

Social Security is different than a traditional pension — a costly company plan that provides guaranteed income for life. Those types of packages are scarce nowadays — only about 20 percent of the full-time private sector workforce still has traditional pensions, according to 2018 data collected by Forbes.

"Given today’s longevity, it is more important than ever to maximize your Social Security benefit. Think of this as an annuity for your lifetime," Charlotte A. Dougherty, founder of Dougherty & Associates in Cincinnati, previously told Investopedia.

"Think of this as an annuity for your lifetime."

- Charlotte A. Dougherty

It's especially important to stay educated about Social Security, as programs have increasingly been facing the threat of long-term insolvency. An official forecast released in late April projects the 84-year-old Social Security program will only be able to pay about 80 percent of the benefits promised in 2035.

“At or around 2034, you're either going to have to cut Social Security benefits very sharply or you're going to have raised taxes to basically keep benefits as they were," MarketWatch columnist Brett Arends told FOX Business’ Neil Cavuto at the time.

Social Security and Medicare currently account for 45 percent of federal spending in the U.S. Economists have also projected that the cost of the entitlement programs is estimated to be nearly 8.7 percent of GDP in 2019.


“The population is getting older, older people vote more ... I don't think anyone is going to be able to run for office on a promise to cut people's Social Security when so many people depend on it,” Arends added.

For those who are planning to retire in the near future, here are five ways to take advantage of the Social Security benefits you're offered.

Work at least 35 years

The age you officially stop working impacts the amount of money you receive. So, many financial experts recommend working a full 35 years — if not more.

Social Security "calculates your average indexed monthly earnings during the 35 years in which you earned the most," the Social Security Administration (SSA) explained in a 2019 report. "We apply a formula to these earnings and arrive at your basic benefit, or 'primary insurance amount.'"

In this case, time is your friend. It gives you a chance to boost your average earnings, which will replace periods of lower income in SSA's calculation.

"If you stop work before you have 35 years of earnings, we use a zero for each year without earnings when we do our calculations to determine the amount of retirement benefits you are due," the SSA noted on its website.

Delay, delay, delay

If you choose to delay retirement past the age of 65, then you could actually see a noticeable increase in benefits. The SSA says it will increase the benefit amount until you start accepting checks or until you're 70 years old.

According to Investopedia, the benefit amount increases by about 8 percent each year you postpone until that 70-mark.

Those who don't retire as soon as they hit 65 should still apply for Medicare benefits "within three months" of their 65th birthday to avoid paying more in the long-run, the SSA recommends.

Don't take benefits before 65

Technically, you can start receiving benefits by age 62, but the SSA advises against this option.

"If you start benefits early, your benefits are reduced a fraction of a percent for each month before your full retirement age," the SSA says.

Think about your spouse

If you're married, then you may be able to reap your spouse's benefits — even if you've never worked under Social Security.

According to NerdWallet, a spouse (born before 1954) can earn up to 50 percent what the highest earner in the household receives at 65.

"If you qualify and apply for your own retirement benefits and for benefits as a spouse, we always pay your own benefits first. If your benefits as a spouse are higher than your own retirement benefits, you will get a combination of benefits equaling the higher spouse benefit," the SSA says.

Consider moving

Retirement age is a great time to consider a big move, especially if you live in a state that taxes your Social Security benefits.

So far, at least 13 states impose taxes on Social Security benefits. They include Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia. In February, a 14th state — Illinois — reportedly said it was mulling a state income tax on Social Security benefits.

While it may sound cliché, The Motley Fool says Florida and Nevada are very tax-friendly options for retirees.

Fox Business' Elise Oggioni contributed to this report.