Personal Finance

4 Smart Social Security Moves You Can Make Right Now

Senior couple looking at an electronic tablet.

Chances are, you'll one day join the ranks of seniors who rely on Social Security during retirement. But even if that milestone is years away, there are steps you can take today to help ensure that you get the most out of the program. Here are a few wise moves that will serve your future self well.

1. Know your full retirement age

Your Social Security benefits are calculated based on your top 35 years of earnings. However, the age at which you initially file for them could alter that figure, for better or worse. If you file at your full retirement age , you'll get to collect the monthly benefit your earnings record entitles you to in full. That age is determined by your year of birth, as follows:

Year of Birth Full Retirement Age
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 67


That said, you actually get an eight-year window to file for Social Security that begins at age 62 and ends at age 70 (technically, you don't have to file at 70, but there's no reason not to). But if you file for benefits at any point ahead of full retirement age, you'll reduce those monthly payments -- and quite possibly for life. And if you hold off taking benefits past full retirement age, you'll increase them by 8% a year until your 70th birthday rolls around (which is why 70 is generally considered the latest age to file). Either way, knowing your full retirement age can help you land on the right choice.

Senior couple looking at an electronic tablet.


Incidentally, 74% of Americans don't know their full retirement age, or so reported Fidelity Investments last year. If you're one of them, commit that number to memory and use it to guide your filing decision.

2. Review your earnings statements

We just learned that Social Security benefits are earnings-based. This means that if you earned more than your neighbor, for example, you may be entitled to a larger monthly benefit at full retirement age. But if the Social Security Administration (SSA) has erroneous information on file about your earnings history, or is missing data, it could negatively impact your benefits.

That's why it's crucial to review your earnings statements from the SSA year after year, and report any errors you spot. If, for example, the SSA has you down earning $45,000 last year when you really earned $75,000, that's a mistake that could lower your benefits. Keep in mind that unless you're 60 or older, those earnings statements won't come to you by mail. Rather, you'll need to create an account on the SSA website and access them there.

3. Fight for a raise at your current job

The more money you make at work, the higher your monthly Social Security payments are apt to be in retirement. And that's one of many reasons why it pays to ask for a raise. Even if you're only able to boost your earnings by, say, 2%, keep in mind that the higher your salary at present, the more you're likely to make in the future, and if you have a number of working years left, a single negotiation could make a difference in the long run.

Of course, having that conversation won't be easy, but if you pull up salary data and are able to prove to your boss that you're statistically underpaid, that's an argument in your favor. Similarly, if you consistently go above and beyond at work, or have done things to earn or save your company money, you can use that as a talking point during that discussion. The key is to not shy away from a potentially awkward topic like money, because doing so could hurt you financially later in life.

4. Strategize with your spouse

If both you and your spouse are entitled to Social Security based on your respective earnings records, you have a real opportunity to maximize those benefits. You might, for example, decide that the lower earner of the two of you will take benefits sooner to generate some income for your household, while the higher earner will hold off and let his or her benefits grow. Or, you might do the opposite -- claim benefits for the higher earner first to get a more substantial income stream initially, all the while growing the smaller benefits into a larger sum. There are different scenarios you can play around with, so be sure to sync up with your spouse and figure out what makes the most sense for both of you.

The Social Security moves you make today could put more cash in your pocket once you're older. So don't slack on any of these -- your retirement depends on it.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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