5 Smart Ways To Maximize Your Social Security Benefits

Steve Pietila
Steve Pietila
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Social Security benefits come with many decisions. Between complex rules, strategies, and choices, it’s easy to feel lost and a bit overwhelmed.

Social Security comprises a significant portion of your retirement income, making it critical to maximize throughout your golden years. That starts with understanding the complex nuances within the system and building a plan that aligns with your goals and income needs.

Today, we’ll examine a few ways you can maximize your overall benefits.

1. Work A Full 35 Years

Your monthly Social Security benefit calculation is based on the highest 35 earning years from your work history. While the specific formula may seem complex, in essence, it takes an average of your earnings, indexed for inflation.

It’s critical to understand that the formula is based on your highest 35 years—even if you don’t have a 35-year work history. Without a full 35 years of earnings, some of those years will be represented by a 0 in the calculation. A zero will decrease your overall benefit.

It’s a good idea to check your earnings record once a year to make sure it’s accurate. You can do this by going to the Social Security website. If you notice an error, it’s better to correct it now rather than waiting until you retire. The last thing you need to worry about is an error in your work record when you’re settling into retirement.

In addition to checking your earnings record, the site provides you with an estimate of your benefit based on your currently reported earnings. This figure can help you build a draft of your retirement budget and income plan.

2. Ramp Up High-Earning Years Through Full Retirement Age

Your earnings typically grow as you advance in your career. If you think about the span of your lifetime earnings, that means your highest-earning years are likely to be your most recent.

Take a look at your highest 35 years of earnings and see if your lowest earning years could be replaced with higher values by working a few more years. For example, if your highest 35 includes a few years of working part-time or at an entry-level job you took right out of college, you could give your monthly benefit a big boost by working a little while longer and replacing those years with your current earning level.

3. Delay Collecting Benefits

When should I collect Social Security benefits?

This question is perhaps the most debated Social Security question on record. There are several different strategies and determining what’s right for you depends on your income need, health history, retirement goals, inflation, and more.

Your Social Security benefit is based on your Full Retirement Age (FRA) but you can file early for a reduced benefit, or delay for an increased benefit. You can file as early as 62 for a 30% reduction in your benefit. You can also delay up to age 70 for up to a 32% increase in your FRA benefit.

So which should you do? The answer depends on your circumstances, but consider how your decision impacts the total benefit you’ll receive over your lifetime. According to census.gov, the life expectancy for men aged 65 years in the U.S. has gradually increased since the 1960s. Now men in the United States aged 65 can expect to live 18 more years on average. Women aged 65 years can expect to live around 20.7 more years on average.

In general, the longer your life expectancy, the more benefit you’ll receive from delaying because you’ll have the time to break even. For most people, waiting at least until full retirement age is a great starting point. If, after a breakeven analysis and holistic review of your plan, you would benefit from delaying benefits, that option can be considered. Our team will help you walk through these important questions.

4. Collect Too Early? Withdraw Your Application

If you decide to start receiving your benefit but later realize you should have waited, you have a chance to reverse it.

You have a 12-month window from the time you start receiving your benefits to withdraw your application. You’ll have to repay any benefits you received during those 12 months, but it allows you to go back to accruing benefits as though you never filed.

5. Coordinate With Your Spouse

Social Security is an important part of your retirement plan, but it isn’t meant to be your only source of income in retirement. For most retirees, it will only replace about 40 percent of their pre-retirement income.

It’s also important to coordinate your Social Security with your spouse. Married couples can maximize their benefits by working together, rather than thinking of their Social Security decisions individually.

For example, if one spouse has significantly higher earnings than the other it could make a lot of sense for the lower-earning spouse to claim their own benefit while the higher-earning spouse delays until age 70. Then, the lower-earning spouse can switch to a spousal benefit.

Whatever you decide, your decision about when to file should be based on your circumstances such as your health, longevity, and other income sources. Work with an experienced advisor to help you make the best decision.

How First Dakota Wealth & Trust Can Help

Social Security decisions should be integrated with our tax and investment plans too. While this may seem a little overwhelming, it doesn’t have to be with our help and the assistance of easy-to-follow software.

First Dakota Wealth & Trust partners with the financial planning application Advizr.com—a robust technology solution that makes it easy to track your financial plan. This tool equipped us with the resources to run simulations that illustrate probability levels for different Social Security strategies as well as retirement withdrawal strategies.

Alongside investments, our Wealth & Trust Officers can help you determine how much you should save for retirement, and when you do retire, we can help you create a spending plan that aligns with your objectives. With our goal-based cash-flow planning, we can work with you to create an income plan specific to you and your goals.

Call us today to get started on a plan that’s tailor-made for you.

First Dakota Wealth & Trust is the fiduciary investment department of First Dakota National Bank with trustee powers to serve clients during their lifetime, during incapacity, and after death. We help clients develop a financial roadmap to help simplify their financial future.


Please note that neither First Dakota National Bank nor First Dakota Wealth & Trust Department, or its employees provides tax or legal advice. This is intended for informational purposes and is not intended to constitute legal or tax advice. Please consult your attorney and/or tax professional for advice related to your specific situation.