Social Security was never meant to be a main source of income that would sustain a person in retirement when it was first established in 1935. Instead, its only goal was to act as a safety net for those who weren’t able to save enough money for retirement. Because of their shortened lifespans and reliance on guaranteed pensions, most Americans never gave Social Security much thought over the following few decades.
1. Work at Least the Full 35 Years
Your benefit amount is determined by the Social Security Administration (SSA) using your lifetime earnings as a basis. Your earnings are adjusted by the SSA by indexing them to reflect changes in the average pay since the years in which you received those earnings.
The benefit you will receive at full retirement age is then calculated by the Social Security Administration (SSA) using an average indexed monthly earnings (AIME) calculation, which adds up your earnings from your 35 highest-earning years.
2. Maximise Income Up to Retirement Age
Your benefit amount will increase if you earn more because the SSA bases its calculation on your earnings. Some people who are close to retirement consider taking on part-time work or starting a business as means of boosting their income. Others, however, unaware of the impact on Benefit, on the other hand, might cut back on their employment or go into semi-retirement without realising the effect on benefits, which could reduce their Social Security income.
The computation excludes earnings over the annual cap, which is set at $160,200 in 2023 ($168,600 in 2024) and is adjusted annually for inflation. Maximising your peak earning years should be your aim, and you should aim to earn at or above the cap.
3. Benefits of Delay
Most people are aware of what their full retirement age (FRA) is, or how old they can start collecting Social Security payments in full. The FRA age for most persons retiring today is 66.
In the event that, at age 66, you are qualified for a primary insurance amount (PIA) of $2,000, or $24,000, your yearly benefit would rise to $31,680 if you wait until age 70. At age 82, your life expectancy would increase your total benefits from $378,000 to $411,000 cumulatively.
4. File for Spousal Benefits and Put Off Your Own
You are eligible to receive spousal benefits and allow your own benefits to increase if you and your spouse were born before January 2, 1954, and you have both attained full retirement age. You can then move to your greater benefit when you turn 70.10One word of caution: If you wish to use this “restricted application,” as it is known, you cannot have claimed your own benefit.
5. Avoid Social Security Tax
You should be aware of the tax ramifications of raising your income if you want to work after you begin collecting Social Security payments in order to augment your retirement income. Federal taxes may be due on any amount received from your benefit payout, ranging from 50% to 85%. “A ‘tax honeymoon’ period is experienced by many investors between retirement and age 72.
They are not yet compelled to take money out of their IRAs and do not have any earned income. They are able to take out the principal of their nonqualified account tax free.
SSI & SSDI Payment Amounts
| Recipient | Unrounded Annual Amounts for the years | SSI & SSDI Payment Amounts | |
| 2023 | 2024 | ||
| Eligible Individual | $10,970.44 | $11,321.49 | $943 |
| Eligible Couple | $16,453.84 | $16,980.36 | $1,415 |
| Essential Person | $5,497.80 | $5,673.73 | $472 |