Planning for retirement requires making informed decisions about how and when to access key sources of income. For most Americans, Social Security is a central piece of that equation. 

According to the Pew Research Center, few, if any, U.S. government programs impact as many people as directly as Social Security. Almost all working Americans contribute to the system, and over 55 million individuals currently receive retirement benefits from it. Millions more also depend on the program for disability support and other forms of assistance.

Social Security has remained one of the most trusted and popular federal programs. A 2024 survey found that 79% of U.S. adults oppose any reduction in its benefits. This sentiment is shared widely across demographics, political affiliations, and income levels. 

Given its importance, understanding how to optimize your Social Security benefits is essential to building a secure and sustainable retirement plan. 

This article explores key strategies to help you make the most of your benefits based on timing, work history, taxes, and more.

Understanding the Basics of Social Security

Social Security is a crucial federal insurance program, providing an income safety net for retirees, individuals with disabilities, and deceased workers. As Investopedia notes, it’s funded by payroll taxes, contributed by both employees through withholding and self-employed individuals via their federal tax returns. 

Workers earn up to four credits annually. In 2024, one credit was granted for every $1,730 earned, with a maximum of four credits ($6,920).

These contributions flow into dedicated trust funds that are used to pay current benefits, with surpluses invested in government securities. A Board of Trustees, including cabinet secretaries and public representatives, oversees these funds. 

Your benefit amount hinges on your 35 highest-earning years and the age you claim, with full retirement age (FRA) typically between 66 and 67. Workers become eligible for early retirement benefits at age 62 after paying into the system for at least 10 years.

Timing Your Claim

A crucial factor in maximizing benefits is the age at which you begin claiming. As MSN reported, a 2019 United Income study revealed retirees collectively lose an estimated $3.4 trillion by claiming Social Security at a “financially sub-optimal time.” 

This research found that 92% of Americans would benefit by waiting until at least age 65, and 71% by waiting until 70.

The SSA imposes a steep penalty for early claiming; for those with a FRA of 67, claiming at 62 means a 30% reduction. Conversely, delaying beyond your FRA yields higher benefits, with a 24% increase for claiming at 70 for those born after 1943. 

A 2022 study echoed these findings. The researchers found that more than 90% of retirees would benefit from waiting until age 70. They estimated a median financial loss of $182,370 for individuals who claimed benefits earlier than the optimal age.

Spousal and Survivor Benefits

A spouse may be eligible to receive up to 50% of their partner’s benefit at full retirement age. If one spouse dies, the survivor can collect the higher of their own benefit or the deceased partner’s, maximizing household income. Coordinating when each spouse claims benefits can make a significant difference. 

Importantly, these benefits extend to same-sex couples. Following the U.S. Supreme Court’s 2015 Obergefell v. Hodges decision, the Social Security Administration (SSA) recognizes same-sex marriages nationwide. According to AARP, same-sex spouses are entitled to the same spousal and survivor benefits as heterosexual couples. 

The SSA may reevaluate previously denied claims by LGBTQ survivors, even if the original applications were submitted decades ago. When legal marriage was not permitted, the SSA considers alternative evidence, such as cohabitation or shared parenting, to determine eligibility.

Strategies for Maximizing Your Social Security

To truly optimize your benefits, consider the following strategies within the context of your broader retirement plan:

  • Work for at least 35 years: Since benefits are calculated using your highest 35 years of earnings, filling any gaps (years without earnings) is important. Zero-income years can considerably lower your average, thus reducing your benefit.
  • Monitor your earnings record: Regularly review your Social Security statement to ensure your work history is accurately recorded, as mistakes can lead to a reduction in benefits.
  • Factor in taxes: Depending on your income in retirement, up to 85% of your Social Security benefits may be taxable. Planning withdrawals from tax-advantaged accounts in coordination with your claiming strategy can reduce your tax burden.
  • Consider health and longevity: If you’re facing health issues or expect a shorter lifespan, claiming benefits earlier could be a practical choice. However, those who are healthy and have longevity in their family may benefit from waiting, as delayed benefits yield higher monthly payments.
  • Coordinate with other income sources: Social Security should complement, not replace, withdrawals from pensions, IRAs, or 401(k)s. Develop a withdrawal plan that balances all sources of income for tax efficiency and cash flow.

Consulting a Social Security guide can also provide valuable insights and help ensure that your claiming decisions align with your long-term financial goals.

The Role of Professional Advice

Navigating Social Security can be complex, and professional guidance often proves essential. A financial planner or retirement specialist can help tailor a claiming strategy that aligns with your unique goals and long-term financial outlook. They can also forecast your future income needs and explain the trade-offs between claiming benefits early versus delaying them to maximize lifetime payouts.

According to MyStages, your Social Security benefit is one of the most important assets you’ll ever decide how to “purchase.” After working most of your life to qualify, it’s crucial to claim this benefit in a way that aligns with your financial goals.

A trusted advisor can also help you understand rules around spousal benefits, taxation, and timing. Personalized advice not only boosts financial confidence but can help you avoid costly mistakes that may reduce your lifetime benefits. 

Common Mistakes to Avoid

Maximizing your Social Security benefits requires careful planning and awareness. Many individuals make costly mistakes due to misinformation or a lack of guidance. According to U.S. News, watching for these seven common mistakes can help you make the most of your retirement:

  • Not asking for help from professionals or using reliable planning tools
  • Not accounting for longevity, which can lead to underestimating your income needs
  • Misunderstandings with spousal benefits, especially timing and eligibility
  • Avoiding the big picture by not integrating Social Security into your broader retirement plan
  • Missing paperwork, delaying, or reducing benefits
  • Not accounting for cost-of-living adjustments, which affect your benefit’s long-term value
  • Not planning early enough, missing strategic opportunities

Frequently Asked Questions

What’s the best way to apply for Social Security retirement benefits?

The best way to apply for Social Security retirement benefits is online through the official SSA website. It’s convenient, secure, and allows you to apply from home. You can also apply by phone or in person at a local SSA office, if preferred or needed.

How do I raise my Social Security benefits?

To raise your Social Security benefits, continue working to boost your lifetime earnings. Social Security calculates benefits based on your highest 35 years of earnings. Therefore, replacing zero or low-income years with higher earnings can increase your payout. Delaying your claim beyond full retirement age also raises your monthly benefit.

What is the maximum salary to max out Social Security?

To max out Social Security benefits, you must earn at least the maximum taxable wage, $168,600 in 2024, for 35 years and delay claiming until age 70. This strategy ensures the highest possible benefit based on lifetime earnings and delayed retirement credits.

Optimizing Social Security is about integrating this vital resource into your overall retirement plan to ensure financial security and peace of mind. By understanding the rules, options, and implications of your choices, you can make decisions that best support your vision for retirement. Whether traveling or enjoying family time, maximizing your benefits is key to a secure retirement.