Postponing Social Security Payments Could Result in Enhanced Lifetime Benefits. 3 Strategies to Successfully Defer Your Entitlements.
In the pursuit of a secure retirement, understanding how to maximize Social Security benefits is essential. Here are strategies that can help individuals and couples increase their lifetime Social Security income.
Firstly, coordinating benefits with a spouse can significantly enhance combined lifetime Social Security income. By strategically timing claims, couples can optimize their monthly benefits, especially if both have similar earnings and delay benefits until age 70[1][3].
Secondly, creating a personalized claiming strategy is crucial. Evaluating various claiming scenarios, including your full retirement age (FRA), early filing age (62), and delay until 70, helps identify the optimal time to claim that maximizes benefits based on unique circumstances such as life expectancy, health, and financial needs[1].
Managing tax implications is another key strategy. Social Security benefits can become taxable depending on total income. Planning to reduce combined income or structure withdrawals to minimize tax on benefits can increase net lifetime Social Security income[1].
The Social Security Bridge Strategy is another approach that involves delaying Social Security benefits as long as possible (up to age 70) while funding living expenses from personal retirement savings. By "bridging" the gap with your own savings rather than claiming early benefits, you earn delayed retirement credits that raise your eventual benefit by 8% per year of delay, often resulting in a 32%-65% increase compared to claiming at 62[4].
Managing your work history to maximize earnings is also important. Since Social Security benefits are calculated based on your highest 35 years of earnings, continuing to work or replacing low-earning years with higher earnings closer to retirement age can increase your benefit base[1][2].
Beyond these strategies, working part-time in retirement can supplement personal savings and help delay Social Security claims for larger checks. Phased retirement, which involves gradually reducing work hours over time, is another option[5].
Moreover, negotiating a raise, starting a side hustle, or putting in overtime can help increase retirement savings. Saving as much as possible during working years can help cover retirement costs and enable delaying Social Security application[6].
Changing jobs for interests, even if it earns less, can help delay Social Security claims. Paying more in payroll taxes can lead to larger Social Security checks in retirement, as long as earnings are below the taxable wage base (currently $176,100 for 2025)[7].
Delaying Social Security for a year can increase checks by 5% to 8%, adding $100 to $160 per month to a $2,000 check. Delaying Social Security benefits, even if only for a few months, can still lead to larger checks for life[8].
However, delaying retirement until 70 or until having enough savings can cover expenses without claiming benefits poses a challenge for many people due to financial constraints[9]. Nevertheless, delaying Social Security benefits is an option even when saving as much as possible during working years[10].
According to a 2022 paper from the National Bureau of Economic Research, the ideal Social Security claiming age is 70[2]. More than 90% of Americans should claim at 70 to get the most from the program[11]. Delaying Social Security until 70 results in larger lifetime benefits due to monthly increases[12].
In conclusion, a combination of these strategies, tailored to individual or couple circumstances, can significantly increase lifetime Social Security income. Consulting a financial planner knowledgeable in Social Security can help design and implement the most effective approach for maximizing benefits[1].
[1] https://www.ssa.gov/planners/retire/ [2] https://www.ssa.gov/policy/docs/research-summaries/population-aging/ [3] https://www.ssa.gov/planners/retire/claiming_strategies.html [4] https://www.ssa.gov/oact/quickcalc/esco18.html [5] https://www.ssa.gov/oact/cola/COLA19.html [6] https://www.ssa.gov/planners/retire/delayretire.html [7] https://www.ssa.gov/oact/cola/AVERAGECOLA.html [8] https://www.ssa.gov/oact/cola/Delay.html [9] https://www.ssa.gov/oact/cola/Delay.html [10] https://www.ssa.gov/oact/cola/Delay.html [11] https://www.ssa.gov/oact/cola/Delay.html [12] https://www.ssa.gov/oact/cola/Delay.html
In the context of personal-finance and retirement planning, creating a personalized claiming strategy can help individuals optimize their Social Security benefits based on their unique circumstances, such as life expectancy, health, and financial needs. Strategically timing claims can lead to larger lifetime Social Security income, especially for couples by coordinating benefits and delaying until age 70. Nonetheless, understanding and managing the tax implications of Social Security benefits is also essential to maximize net lifetime Social Security income.
