3 Ways to Boost Your Social Security Payments

Roughly 71 million Americans receive Social Security benefits. If you're moving toward retirement and plan to join their ranks, here are three ways you can ensure you're bringing in the highest possible benefit amount.

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1. Delay claiming benefits

You've probably heard or read this first tip 1,000 times -- primarily because it works. One of the most powerful ways to increase Social Security payments is to wait longer before claiming them for the first time. While you can claim benefits as early as age 62, here's how much waiting can increase those checks:

• Age 62: Permanent reduction of up to 30% from your full retirement age (FRA). For example, if you were expecting a $2,000 monthly benefit at FRA, it would be bumped down to around $1,400.
• Full retirement at 67: You receive 100% of your Primary Insurance Amount (PIA). PIA is the amount you're scheduled to receive once you hit FRA.
• Delaying claim, up to age 70: Each year you delay your claim before FRA and age 70 increases your benefit by approximately 8% per year. That means that a PIA amount of $2,000 becomes $2,480 per month.

2. Maximize earnings during your work years

Social Security benefits are calculated based on your 35 highest years of earnings. Here are three ways to boost that amount:

• Work at least 35 years: For any year you don't work, a zero is averaged into your benefit calculation, lowering your monthly payment.
• Replace low-earning years: If you've already worked 35 years or more, continuing to work at a higher salary will replace earlier, lower-earning years.
• Increase your income: Higher earnings directly translate to higher benefits. The income doesn't necessarily have to come from your "regular" job. Turn a hobby into a part-time gig, claim the income on your taxes, and watch your benefits increase.

3. Write a new chapter

According to the Social Security benefits formula, waiting until age 70 to claim benefits is the easiest way to max out the amount you receive. Still, not everyone can (or wants to) wait until age 70. If possible, try to make it to FRA so you can receive 100% of the PIA you're due. Then, if you still have something in the tank to give, supercharge your monthly budget by continuing to work -- either in your current job or in one you'd enjoy more. The combination of earned income and Social Security benefits will not only help you "ease" into full-time retirement, but the extra money can be used to increase your emergency fund, pay down debt, or invest.

As you decide how you want to maximize Social Security benefits, run a post-retirement budget to learn how much you'll need to retire. That number gives you a target to aim for and offers a better sense of how much longer you might want to work. The important thing to remember is that everyone's target is different. Don't worry about what anyone else needs to retire; this is all about you.

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