Social Security: 3 Tips to Maximize Benefits for High-Net-Worth Individuals

Although some lawmakers have proposed reducing Social Security benefits for wealthy Americans, for now, high-net-worth individuals still qualify for full retirement benefits. Most also likely qualify for the maximum benefit, which is $4,873 a month in 2024.

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To qualify for the maximum benefit, you must have equaled or exceeded Social Security’s maximum taxable income for at least 35 years of your working life. The maximum taxable income is the amount of wages on which you pay Social Security taxes, which are deducted from your earnings.

In 2024, the maximum taxable income is $168,600 a year, up from $160,200 in 2023. Any earnings above that are not subject to Social Security taxes. The figure is adjusted every year based on shifts in national wage levels.

Americans worth millions of dollars probably don’t need Social Security benefits to get by. But since they qualify for them, they might as well get the biggest bang for the buck. Here are three ways they can maximize their benefits.

Delay Claiming as Long as Possible

You can claim Social Security benefits as early as age 62, but your monthly payment goes up the longer you delay claiming. After you reach full retirement age — currently 66 or 67, depending on your birthdate — your benefit will rise by 8% a year up to age 70.

Waiting until age 70 to claim Social Security will guarantee the biggest check possible, and increase your total monthly payment by more than three-quarters compared to collecting at age 62.

Choose the Right Spousal Strategy

Waiting to claim spousal benefits can also help maximize your check. A spouse’s Social Security benefit — i.e., one based on their spouse’s record instead of their own — is directly tied to the payout that the primary beneficiary receives. If your spouse files for benefits at age 62, your spousal benefit will be permanently reduced as well.

But you don’t want to wait too long to claim, either. For most Social Security applicants, waiting until age 70 ensures the maximum payment. However, spouses can’t take advantage of the age 70 rule because their payout is capped at 50% of the primary beneficiary’s full retirement benefit. Even if your spouse waits until age 70 to collect Social Security, your maximum benefit remains at 50% of the primary beneficiary’s FRA benefit amount.

Move to a State That Doesn’t Tax Benefits

The vast majority of Americans don’t have to worry about paying state income taxes on their Social Security benefits. However, some states do impose state income taxes on Social Security checks. If you live in one of those states, relocating elsewhere can help you maximize your benefits.

These are the states that still tax Social Security benefits as of May 2024:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Montana
  • New Mexico
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

Earlier this year, West Virginia’s House of Delegates approved a bill that would cut and gradually phase out the state income tax on Social Security benefits, the AP reported.

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This article originally appeared on GOBankingRates.com: Social Security: 3 Tips to Maximize Benefits for High-Net-Worth Individuals

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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