You’ve worked yourself to exhaustion for decades and decades, and you’ve paid all your Social Security taxes. Thank you for serving the nation with care and passion: now it’s time for America to give you back a little of what you have given with a proper and fair retirement plan.
Although Social Security retirement payments are going to represent a substantial part of your income, once you become a retired person, they are not intended to replace all of your income. That’s why you have to do everything possible to get the highest payment possible.
How to Get a Higher Social Security Retirement Payout
Let’s go step by step, so we can cover all the actions you can take in order to better your Social Security checks. This program’s benefits are determined by the top-earning 35 years of your working life. Don’t worry if you won’t have a full 35 years of work under your belt; you can still qualify for benefits.
In such situations, the Social Security Administration (SSA) will simply count zero earnings for every year less than 35 in which you didn’t work. While this might result in smaller benefit payments compared to someone who worked a full 35 years, you are still entitled to retirement benefits.
Be really detail-oriented when you report your income tax. The SSA calculates your earnings using that as a parameter. This aligns with the calendar year. Therefore, if it’s possible for you to continue working through the end of the year or even for a full 35 years, it’s advisable to do so.
One of the most effective ways to increase your Social Security benefits is to delay claiming them. While you can start receiving benefits as early as age 62, your monthly payment increases significantly for each year you delay, up until the age of 70.
Delaying benefits until your Full Retirement Age (FRA), which varies depending on your birth year, can result in a substantial boost to your monthly check. By postponing retirement and continuing to work, you not only accumulate more credits but also increase your average indexed monthly earnings (AIME).
Social Security Spousal Benefits Could Improve The Household’s Income
If you are married, you may be eligible for spousal benefits, which can provide an additional source of income during retirement. Spousal benefits allow you to receive up to 50% of your spouse’s Social Security benefit, provided you meet certain eligibility criteria. Careful planning and coordination with your spouse can help maximize your combined benefits.
To qualify for spousal benefits, you must be married to a worker who is eligible for Social Security benefits or be the divorced spouse of an eligible worker. In the case of divorce, specific criteria must be met, such as a marriage that lasted at least ten years. Regularly, you can start claiming spousal benefits at age 62 but, if possible, wait until your FRA and get more money.
The amount you receive as a spousal benefit is based on your spouse’s earnings history. You can receive up to 50% of your spouse’s full retirement benefit amount if you claim at your full retirement age.
How to Save Money by Moving to Tax-Free States
Certainly, residing in a state that doesn’t levy a state tax on Social Security payments isn’t a direct method to How to Get Better Social Security Retirement Payouts, and it may not be feasible for the majority of retirees. Nevertheless, it offers the advantage of retaining a larger portion of your prospective benefits.
In fact, a significant number of states, specifically 38 of them, do not subject Social Security benefits to state income taxation. It’s worth noting that there are only a dozen states that currently consider Social Security benefits as taxable income under certain circumstances.
Only 12 states put taxes on Social Security payments, and those are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
The states that do not tax Social Security benefits are Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Nevada, New Hampshire, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, and Wyoming. North Dakota also joined this group in 2021.
On the other hand, 11 states do tax Social Security benefits. These states are Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
Colorado is a special case, it taxes Social Security benefits only on recipients under age 65. However, Coloradans aged 65 and older can fully deduct Social Security benefits from their state income, effective with the 2022 tax returns they file in 2023.