(NewsNation) — Millions of retirees count on Social Security as their main source of income so it’s important to know how to maximize your monthly check.
The size of your monthly benefit depends on how long you worked, how much you made over your career and when you started collecting, but there are important cut-offs to keep in mind.
Here are six ways you may be able to enhance your benefits.
You can use the NewsNation Social Security calculator to estimate your monthly benefit.
Social Security Calculator
Estimate your Social Security benefits based on your current salary and planned retirement age.
Know your full retirement age
To get 100% of the benefit you’ve earned, you’ll have to wait until your full retirement age to claim Social Security. For most people today, that age is 67 but it depends on when you were born.
Those who claim benefits before their full retirement age have their monthly check permanently reduced based on how early they start.
For example, if someone’s full retirement age is 67. They can start receiving benefits at 62 — five years early — but they would see their monthly check lowered by roughly 30%. That means a $1,000 benefit would be cut to $700.
On the other hand, delaying collecting results in a bigger monthly paycheck.
A person who’s eligible for full retirement at 67 would receive an 8% bump every year they wait to collect until they turn 70. That means you can earn up to 124% of your full benefit by waiting until you’re 70.
Collecting later is usually better
There’s no perfect age to claim Social Security because everyone’s circumstances are different, but research suggests most people would benefit from waiting until 70.
A 2019 study commissioned by United Income found that 57% of retirees would build more wealth over their lives if they waited until 70 to collect. The report estimated that older Americans lose an average of $111,000 per household because they claimed Social Security at a “sub-optimal time.”
Another 2022 working paper for the National Bureau of Economic Research (NBER) concluded that over 90% of people should wait until 70 to maximize their benefits, even though only 10% do so.
For some, like those with a terminal illness or slim retirement savings, it may make sense to claim benefits as early as possible.
Work the full 35 years
You need to have worked and paid Social Security taxes for at least ten years to qualify for a monthly retirement check but to maximize your benefit, you’ll need to have worked 35 years.
The size of your monthly check is based on your highest 35 years of earnings. Those who work less than that get a “zero” for every year with no earnings, which drags down their benefit.
Working beyond 35 years could have some advantages, particularly if someone is making more at the end of their career than when they started. The more you earn over your career, the higher your benefit will be, though there are limits depending on when you collect.
Here’s how the maximum Social Security retirement benefit breaks down in 2024:
- Retired at earliest retirement age (62): $2,710 per month
- Retired at full retirement age: $3,822 per month
- Retired at age 70: $4,873 per month
Check your tax bracket
Under current law, individuals who earn above $25,000 pay income tax on up to 50% of their Social Security retirement benefits. For seniors who earn above $34,000, an additional 35% of benefits are taxable. Nine states also collect taxes on Social Security.
This is important to keep in mind if you’re still working while receiving benefits.
Today, roughly 40% of Social Security recipients pay federal income taxes on their benefits, according to the Social Security Administration. That share has risen from 26% in 1998 because the exemption thresholds don’t go up with inflation, an example of so-called “bracket creep.”
Beware of your earnings
For those who continue to work after their Social Security payments begin, it’s important to make sure your earnings don’t exceed the allowed limit.
Social Security withholds benefits if your earnings exceed a certain level when you’re under your full retirement age.
In 2024, the annual exempt amount is $22,320 for recipients who aren’t at their full retirement age. Anyone making more than that has $1 in benefits withheld for every $2 of earnings they’re over.
For those who reach their full retirement age at some point in 2024, the exempt amount is $59,520.
It’s worth noting that any benefits withheld while you continue to work aren’t lost.
“Once you reach (full retirement age), your monthly benefit will be increased permanently to account for the months in which benefits were withheld,” according to the Social Security Administration.
Pausing benefits can lead to bigger check
Those who have hit their full retirement age but aren’t yet 70 can temporarily suspend their benefits to earn delayed retirement credits. For every month you pause payments your future monthly check goes up.
This might make sense for someone who chooses to go back to work or comes into money and can afford to delay taking Social Security.
To stop your benefits, you’ll have to fill out Social Security Administration Form 521, Request for Withdrawal of Application.
If you decide to suspend your benefits, anyone else receiving benefits on your record, like a spouse, will also be suspended.