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Social Security has long been a key source of retirement income. And in retirement, the more income you have, the better. In this article, learn about the strategies that can help raise your monthly Social Security payments.
It pays to wait
You can receive Social Security retirement benefits as early as age 62. But the longer you wait to claim benefits, up until age 70, the higher your monthly payments will be—for life.
Won’t I lose out by waiting?
You would miss out on payments in the early years. But you’d catch up later because your monthly benefit payments would be higher. And because those higher payments continue, you’d accumulate greater lifetime benefits. So you could win by waiting.
Will I live long enough to benefit?
Your health and family history best suggest how long you’ll live. More and more, Americans are living longer than before.
The median life expectancy of Americans who reach age 65 is 84 for men and 86½ for women. And about one out of every three 65-year-olds today will live past age 90.
The median life expectancy of Americans who reach age 65 is 84 for men and 86½ for women. And about one out of every three 65-year-olds today will live past age 90.
HELPFUL HINT
Think of Social Security as an insurance policy against running out of money over a long life. If you’re in good health and can afford to wait, delaying your Social Security benefits could pay off in the long run.
Source: Social Security Administration.
Obtain an estimate of your benefits at different ages
It’s easy to see what your payments might be with Social Security’s Retirement Estimator.*
The tool uses your actual work history to estimate your monthly benefit payments at three different ages. You can see how much more you might get if you wait to take Social Security.
The tool uses your actual work history to estimate your monthly benefit payments at three different ages. You can see how much more you might get if you wait to take Social Security.
Couples can work together to increase benefits
When to take Social Security can be a joint decision if you’re married. That’s because your spouse will inherit your benefit amount.
An example: Sofia and Reggie
Sofia, age 61, is an architect who has been the primary earner for her family. Sofia’s husband, Reggie, an 8th-grade English teacher, is also age 61.
Sofia and Reggie both retire at age 66. They can live on their retirement savings until age 70. While Reggie starts taking Social Security at age 66, they decide to wait to take Sofia’s Social Security until age 70. That’s when she would get her maximum payment.
While she waits to file, Sofia’s Social Security benefit will increase by 8% each year from age 66 to age 70. Years later, that higher payment could be inherited by Reggie if he outlives Sofia.
Sofia and Reggie both retire at age 66. They can live on their retirement savings until age 70. While Reggie starts taking Social Security at age 66, they decide to wait to take Sofia’s Social Security until age 70. That’s when she would get her maximum payment.
While she waits to file, Sofia’s Social Security benefit will increase by 8% each year from age 66 to age 70. Years later, that higher payment could be inherited by Reggie if he outlives Sofia.
Working while taking retirement benefits could mean a cut
If you collect benefits, they can be cut if you earn too much income before your full retirement age.
If you want to work for pay, make sure you know the rules. Because if you make too much in a year, your Social Security benefits can be reduced.
You can see the current limits on income here.* Or to see how working for pay might cut your benefits, use Social Security’s Retirement Earnings Test Calculator.*
If you want to work for pay, make sure you know the rules. Because if you make too much in a year, your Social Security benefits can be reduced.
You can see the current limits on income here.* Or to see how working for pay might cut your benefits, use Social Security’s Retirement Earnings Test Calculator.*
Investment income doesn’t matter
Working for pay can reduce your benefits. But money from savings, pensions, or IRAs won’t affect your benefits in any way.
Earn all you want at full retirement age
Once you reach full retirement age, working for pay won’t affect your benefits. For all workers born since 1962, full retirement age is age 67. You can find your full retirement age at the Social Security Administration website.*
*When you visit this site, you will be leaving our site. Vanguard is not responsible for the accuracy of information on third-party sites. Vanguard receives no remuneration for website links.
Understand Social Security’s long-term prospects
Many people believe that Social Security will fail. Are they right?
A look at the books
Each year, independent experts examine the program’s finances. In their latest audit, they concluded it has enough money to pay all benefits until the year 2034.** But that doesn’t mean the program will fail. It could still pay approximately 77% of its promised benefits with just the money it collects in payroll taxes.
That would be a hardship for many retirees. But there is no expectation that Social Security payments would stop entirely. And in the meantime, politicians may find a way to fund it entirely.
That would be a hardship for many retirees. But there is no expectation that Social Security payments would stop entirely. And in the meantime, politicians may find a way to fund it entirely.
What you can do
If you feel strongly that you can’t count on Social Security, consider raising your savings rate today. You would have more savings to rely on if your benefits are reduced or eliminated.
**Source: The 2023 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, March 2023.