Why Some Retirees Lock Up Small Social Security Checks
If you haven’t tapped into your Social Security benefits yet, you may be able to increase how much money you’ll get from the government over the course of your lifetime.
Making small tweaks can increase your payouts by hundreds or thousands of dollars. Here are five steps you can take.
1. Work for one or two years
The Social Security Administration uses your lifetime earnings, age requirement and cost of living adjustments to determine your benefits. The longer you wait to claim Social Security benefits, the more you will receive each month. However, there is an added benefit that comes with working longer.
Working a few extra years can affect your lifetime earnings. The Social Security Administration looks at your 35 highest earning years to calculate your benefits. Since people often earn higher wages later in their careers, you can work an extra year or two to make up for a lower-earning year during the 35 years that Social Security will pay more.
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2. Use spousal and survivor benefits strategically
Claiming Social Security is even more difficult for married couples, especially if they are different in age. However, there are certain ways that spouses can claim social security. Some couples have the lower income earner first so the couple can live off those benefits and other sources of income. Then, when the high earner claims his profit, it will have grown more than what the low earner would have.
The longer each spouse delays benefits, the more they will earn in the long run. Delaying Social Security also increases the survival benefit. Retirees can extend their Social Security eligibility by working longer or using their nest eggs as a bridge.
3. Understand the income test
If you’re under full retirement age — 66 or 67, depending on when you were born — Social Security will withhold some of your benefits based on a formula. In 2026, $1 is deducted for every $2 you earn over $24,480. If you are at full retirement age, $1 is deducted for every $3 over $65,160 in annual income. The latter rule only applies to the months before reaching full retirement age, but then the limit no longer applies, and no more deductions are made.
This “earnings test” will determine how much of your Social Security is withheld. You will gradually be paid back the amount withheld through higher Social Security benefits once you reach full retirement age. Note that the plan does not count investment income, pensions, annuities and interest in its benefit assessment
It’s important to understand the ins and outs of how income testing will affect your benefits so you can determine the best time to claim your benefits – and take steps to allow you to wait until you’re unemployed to apply. You can also use the Social Security Administration’s income assessment calculator to help you make your decision.
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4. Check your tax situation
Although the earnings test only applies if you are under full retirement age, you should always be aware of the tax effect on your Social Security benefits. Your benefits are taxable if your combined income (adjusted gross income, tax-free interest and partial benefits) exceeds $25,000 if you’re single or $32,000 for married people filing jointly.
Up to 50% of your earnings are taxable if your income is from $25,000 to $34,000 (or $32,000 to $44,000 for married couples filing jointly). Then, up to 85% of your benefits are taxable if your income is over $34,000 (or over $44,000 for married couples).
Some retirees use a “bridge strategy,” which involves tapping into retirement savings accounts before tapping into Social Security. This allows them to stop filing and their benefits grow, and it can reduce your tax burden and reduce required future minimum distributions (RMDs) from traditional retirement accounts later in life.
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5. Track annual COLA changes
A cost of living adjustment (COLA) will enhance your Social Security benefits. These changes help retirees keep up with inflation and make it easier for them to pay for everyday expenses. These COLA changes may also change the tax status of your benefits, so it’s important to track any changes to your benefits.
