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Step 1
First off, many people think that Social Security benefits is based on the last 5 years of your earnings. This is not true! The Social Security Administration uses your highest earnings out of your 35 years. If you worked 40 years, they only take out 5 years of your lowest earnings.
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Step 2
Next, make sure to check up on your PEBES. Each year, you will receive a copy of the Personal Earnings and Benefit Estimate Statement from your Social Security Administration. This statement is helpful in calculating your future Social Security benefits, so it's important that you see everything is reported correctly. It also gives you a projection of future Social Security benefits, so make sure to follow up on it.
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Step 3
Many people do not know their real retirement age. Although it ranges from 65 to 67 years of age (based on when you are born), retiring as early as 62 might limit you from receiving full Social Security benefits. For example, by waiting until you're 70 years of age, you can get over 130% more in Social Security benefits!
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Step 4
Another special strategy applies if you are divorced. You might be able to tap into your ex's Social Security benefits and earnings. Spousal benefits apply as if you were married-50% of your ex's benefits at age 65. Some restrictions apply, such as having been married for at least 10 years, you cannot be married to someone else, ex's benefits received have to be bigger than your benefit that you received, and your ex did not sign up for Social Security, you must be divorced for at least 2 years.
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Step 5
Another strategy applies if your spouse did not work, or not have enough credits for Social Security benefits. It's known as the "claim and suspend" where once the higher earner reaches full retirement age, he can claim and suspend his benefits; the spouse can therefore receive benefits based on the working spouse's earnings.
