Social security offers a reliable income stream, but there are ways to boost your payout. The right claiming strategy can significantly increase your retirement income.

Social Security calculates your benefits by averaging your 35 highest salary years, adjusting them for wage inflation. Any zeros from missing out on working years will cut your retirement payout.

Work Longer

You’ve been paying into social security your entire career, with a portion of every hard-earned paycheck reduced by social security withholding. Now that retirement is drawing near. You want to maximize your benefits.

The 35 years with the highest income are used to calculate your social security benefits, so working more years is one of the ways to maximize social security benefits. And if you’re married, continuing to work can add even more to your social security check.

Waiting to claim social security can also make a big difference depending on age. Each year you delay past your full retirement age, your benefit will increase until it reaches the maximum at 70.

This option is only an option for some. But delaying can be an excellent strategy for those with good health and reasonable longevity. It’s also an opportunity to earn 8% in delayed retirement credits. Those credits need to be filled in your bank account, but they will help boost your social security check in retirement.

Earn More

If you’re already collecting social security, working longer is still time to get extra income. But you’ll want to avoid earning more than the annual earnings limit if you’re under full retirement age because social security will deduct $1 from your check for every $2 you earn over that limit.

If your top 35 years of earnings have yet to include many high-income years, boosting those numbers with more work can make a big difference in your future benefits. But it’s important to model your claiming strategy carefully because many complications, including the windfall elimination provision and the government pension offset, can significantly alter your calculation.

Those who already have a completed 35-year earnings record can start over by voluntarily suspending their benefits as long as they’re at or beyond their full retirement age and don’t have any other source of guaranteed income (like an annuity). That allows them to earn delayed retirement credits, which could boost future monthly checks by up to 8%.

Delay Claiming

If you have assets other than your savings and investments accounts that can be tapped for a few years while you delay claiming benefits, doing so can make it possible to reach your break-even point – the age when higher monthly benefits start to exceed lower ones you would receive if you had claimed earlier. It typically takes between 12 and 14 years to reach this point.

As a bonus, delaying your social security claims also means that future cost-of-living adjustments (COLA) will be applied to a more extensive base, which could result in substantially larger checks in your 80s and 90s. It is valuable insurance against longevity risk, the chance you will live longer than average.

Your projection of how long you will live ultimately determines how long you will live. Of course, it is impossible to know since anyone could die in an accident or be diagnosed with a terminal next week. But history and current medical records suggest that most people who survive to an advanced age will come ahead if they delay claiming their social security benefits.

Delay Delaying

One argument for delaying social security is that it diversifies your taxable income. Once your benefits start, 50% to 85% are taxed, meaning claiming earlier reduces your federal taxes.

However, the decision to delay social security hinges on your assumptions about how long you’ll live. Of course, anyone could get a terminal diagnosis next week or die in an accident tomorrow. Still, your health and family history may indicate you’ll have a longer life expectancy than the average person.

If you have other retirement accounts with stable sources of income, and your life expectancy calculator indicates that you’ll live to at least age 82, it makes sense to delay claiming. That’s even true if you still determine if you’ll have enough money to live without the guaranteed monthly checks. In that case, a structured annuity-like MassMutual’s Immediate Income Annuity (SPIA) can provide a predictable stream of guaranteed lifetime income to supplement your social security benefit.