Tips to Maximize Social Security Benefits

Delaying payments and knowing spousal benefit rules will help many people boost incomes.

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The Boomerater™ Report, our weekly collaboration with online baby boomer resource Boomerater, this week discusses various tips to help you maximize your income from Social Security.

[See Billions in Social Security Not Being Claimed.] Here is the question from a Boomerater member: “My wife was a stay-at-home mom, but did work for about 12 years. Is she entitled to Social Security benefits? If so, what’s the best age to begin taking benefits? She and I are both 60 years old and would like to learn of any tips that can help us maximize income from Social Security.”

The amount of your benefit. Most people can elect to begin taking Social Security when they turn 62, but benefits increase each year they are not taken until age 70. The level of your benefits are determined by your lifetime earnings history. Outside earnings may reduce your Social Security benefits until you've reached what's known as your Full Retirement Age (FRA) -- 65 for those born before 1938, and increasing to 67 for those born in 1960 and later. You can go to this link and use the Retirement Estimator to determine your benefit amount.

Eligibility. To qualify for retirement benefits you will have needed to work for at least 10 years or 40 quarters of credit. You can delay receiving your benefits until age 70 and will receive Delayed Retirement Credits (DRCs) for doing so. Depending upon your age, your eventual monthly benefit will be increased by 6.5 percent to 8 percent per year for each year benefits are deferred up to age 70.

Income taxes. Most recipients receive benefits tax free. However, those with higher incomes must include up to 85 percent of their Social Security benefits in their taxable incomes.

[See Do You Know Social Security Earnings Rules?]

Lesser known, but very important Social Security “factoids”:

1) If you are married and your spouse has not earned any Social Security credits, your spouse can collect a spousal benefit once you've reached your FRA and are collecting benefits yourself. You can then “suspend” your own benefits and earn more DRC’s up until age 70. That way, your spouse gets benefits now and your benefits continue to increase both for yourself and your spouse (widow/widower benefit).

2) If you are married and both spouses have earned Social Security credits, the higher earner should consider delaying benefits, and the lower earner should consider starting benefits early at age 62. The reason behind this is that the lower-earning spouse receives his/her benefits now and would also be eligible for increased benefits should their spouse die. Actuarially, this usually makes good financial sense (based on the net present value of total benefits received). However, if there is a family history of poor health or longevity, a different approach should be considered (if in poor health, both spouses should consider taking Social Security early; if in good health, both should consider delaying until age 70).

This advice was provided by certified financial planner Paul C. Bennett, a featured advisor in Boomerater’s financial advisor directory.

Timing is a key factor for how much you will get. Another Boomerater member wrote: "This is really great info. I want to emphasize the importance of WHEN you begin taking benefits. I am still working at 61, don’t see myself retiring anytime soon, and plan to delay taking my benefits until I’m 70. My calculations show that paying into additional Social Security, plus getting a benefit credit for every year I delay (increasing until I’m 70) will greatly maximize what my monthly check will be. Waiting until you can get maximum benefits at 65 will give you your full benefit (but not the extra delay credit I plan to receive). And though you could start taking benefits at 62, it would decrease your amount by 25 percent to 30 percent for your entire life. That’s a huge loss for just getting three extra years of reduced benefits."

[See Social Security, Medicare Busts Move Closer.]

Read other member tips for maximizing your Social Security income on Boomerater.

Boomerater is an online resource for baby boomers, with local directories to help you find everything from a Chicago financial advisor to Texas retirement living communities. The site also contains forums where boomers can post questions and swap first-hand experiences. If there are questions on your mind that you would like answered by other people who have faced similar situations, or you have advice of your own to share, go to and participate in the forums. Say that The Best Life sent you.