Your Social Security checks are one of your most important and valuable sources of retirement income for two big reasons. First, your benefits are guaranteed until you pass away, so you can't run out of them. Second, the cost-of-living adjustments (COLAs) are built into the benefits program, protecting your benefits against the damaging impact of inflation.
Since your Social Security checks are so crucial, it's worth trying to make them bigger if you can. The good news is that there are several ways to do that, both during your career and when you've reached retirement age. Here are four surefire methods of supersizing your checks that you may want to try.
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1. Increase your earnings
One of the best ways to end up with a larger Social Security benefit is to get serious about increasing your earnings as soon as you can. Your benefits replace a percentage of your average income -- typically around 40% -- so the more you earn, the better off you'll be. Social Security looks at all your wages, adjusts them for inflation, and calculates benefits based on the 35 years you earned the most. The sooner you can start earning more money, the bigger the impact.
There are a few different ways you can boost earnings. You can work more hours or pick up a side gig for a few hours a month. You can also increase your job skills or consider starting a business of your own if you have an inspiring idea. Negotiating your salary when you're hired or during performance reviews could also help you make more money -- and thus end up with a larger Social Security check because of it.
2. Work longer if you're earning more toward the end of your career
As mentioned above, your benefits are based on your most lucrative 35 years of work. If your salary has increased over time (even after accounting for inflation), it can pay off to put in more than 35 years on the job. Think about it. Which year would you rather have counted in your benefits formula: a year when you worked at your current high salary at the peak of your career or the first year you started work in your entry-level job?
You can check out your earnings record on your mySocialSecurity account to see how long your work history is and how much money you made in the past. If you aren't happy with some of the years that are currently part of the 35 in your formula, then staying on the job may make sense.
3. Delay claiming your benefits
Putting off the date when you start your Social Security checks is another surefire way to increase the income your Social Security payments offer. The system is designed so late filers get more money in each check.
You can claim Social Security starting at age 62, but you can also wait until age 70. You get your standard benefit based on earnings at your Full Retirement Age (FRA). For everyone who hasn't yet retired, FRA is between 66 and 8 months and 67, depending on your birth year. A claim before FRA comes with monthly early filing penalties, and a claim delayed until after your FRA comes with delayed filing credits until age 70.
A year of early filing penalties will reduce benefits by 6.7% for each of the first three years and an additional 5% for years before that. Each year of waiting after FRA until 70 results in an 8% benefits increase. This can have a big impact on your monthly payment. Plus, studies have shown the majority of retirees end up with more lifetime benefits if they wait until 70 to start their checks rather than claim early.
4. Live in a state that doesn't tax social security
Finally, if you live in one of the 10 states that still taxes Social Security benefits , you should think about moving. If you relocate to a state that doesn't impose this financial burden, you'll bring home bigger checks. However, weigh other factors such as proximity to friends and family and the cost of living in the state you're considering moving to.
By implementing any or all of these four techniques, you can make your Social Security stretch further and set yourself up for a more comfortable retirement.
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