What Is the Social Security Bonus?

FT Contributor  | 

Social Security is an insurance program administered by the federal government that provides financial assistance to retirees, persons who become disabled, and family members of deceased workers. When you apply for Social Security as a retiree, the amount you’re awarded each month is based on the wages you earned while you were working.

While there is no specific “Social Security bonus” available to eligible beneficiaries, your monthly Social Security payments may be higher each month if you wait to retire for years after your full retirement age. Your full retirement age is the age in which you are officially eligible to receive Social Security benefits once you retire. If you were born before 1937, you may retire at age 65 and start claiming full Social Security benefits. You can begin claiming full Social Security benefits at age 67 if you were born in 1960 or later. You can’t begin to claim any Social Security benefits until you turn 62.

If you wait for years after your full retirement age to claim benefits, the Social Security Administration (SSA) issues your payments for a shorter period of time. Therefore, the payments provided each month are higher than if you retire as soon as you become eligible for benefits. In this situation, you could consider your higher monthly payments as a “Social Security bonus.” Keep in mind, you lose access to your Social Security benefits at age 70 and can no longer apply to claim them.

How to Maximize Your Social Security Benefits

While a “Social Security bonus” may sound tempting, it’s important to analyze your personal situation to determine when you should start claiming benefits. Everyone is different and it may be more beneficial for you to begin claiming benefits as soon as you’re eligible. When determining the best time to begin claiming benefits, consider your current financial situation, health status, and family longevity. The following are some of the strategies you may find useful when attempting to maximize your benefits:

Work for 35 Years

Your monthly Social Security benefit payment is calculated based on your lifetime earnings. The SSA takes 35 working years in which you earned the most and uses an average to calculate the benefits you’re owed each month.

The more income you can show you’ve earned, the higher your monthly benefit payment is likely to be. If you work for a full 35 years or longer, the SSA has more years to choose from and you may earn more in a few of those last years. By providing the SSA with years that show higher income, your benefit payment calculation increases.

Earn More Through Retirement Age

As discussed earlier, the higher your earnings while you’re working, the higher your monthly Social Security benefit payment. As you near your retirement age, it’s tempting to begin cutting back on work to prepare yourself for eventually giving up your income completely. However, when you scale back on work and earn less, the SSA has fewer years of high income to use when calculating your benefit payments.

If you continue to work at your maximum pay level before going into retirement, you’re proving you earned a high income throughout your career. The SSA can use these high-income years when calculating your monthly benefit payment. If you’ve already decreased your hours at your full-time job in preparation for retirement, consider taking on a part-time job so you can continue showing maximum income.

Claim Spousal Benefits and Delay Yours

In certain situations, you may be able to claim your spousal benefits first to supplement your income while you delay claiming your own to let them grow. You can then switch to your own higher benefit payment when you reach 70. However, to be eligible to claim spousal benefits first, you must meet the following qualifications:

  • You and your spouse were both born before January 2, 1954.
  • You and your spouse have both already reached full retirement age.
  • You have not claimed any Social Security benefits yet.
  • Your spouse has already filed for their own Social Security benefits.

Preparing for retirement and thinking of you and your spouse’s Social Security benefits as a package can help maximize the benefits you receive during retirement.

Avoid Social Security Tax

If you don’t have enough money saved in retirement to stop working completely, you may be subject to taxes on the income you earn after you claim Social Security. However, this will only happen if you earn a specific amount.

If the Internal Revenue Service (IRS) adds up half of your Social Security income with your adjusted gross income (AGI) and it totals $25,000 to $34,000 as a single tax filer or $32,000 to $44,000 as a joint tax filer, you’ll owe taxes on half of your Social Security income. If you can spread out the income you earn in retirement, your income totals may not reach the taxable threshold. To avoid paying taxes on your benefits, you must be strategic about when you earn income so you aren’t subject to taxes.

Withdraw Your Social Security Application

If you’ve already applied for Social Security benefits but want to wait for a higher benefit payment, you may be able to withdraw your application. This will ensure your monthly benefit payment is higher when you do apply for Social Security again.

If you’ve already claimed at least 12 months of benefits, you’re not eligible to withdraw your application. The SSA only allows you to withdraw a Social Security application once in your lifetime. If you successfully withdraw your application, you’re required to pay back the benefits you and/or your family already received.

Include Family

If you have children, they may also be entitled to receive Social Security benefit payments from your account when you claim benefits. To be eligible to receive payments, your child cannot be married and must be one of the following:

  • Younger than 18.
  • Between 18 and 19 and attending elementary or secondary school full-time.
  • 18 or older and living with a disability that was diagnosed before age 22.

In some circumstances, stepchildren, adopted children, grandchildren, or step-grandchildren may also be eligible to claim your Social Security benefits.

Social Security is not meant to be your only source of retirement income, so it’s important to plan for retirement in advance. However, by maximizing the number of benefits you receive each month, you can increase your income throughout your retirement years.


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This post was updated January 29, 2020. It was originally published January 29, 2020.