How to Maximize Your Social Security Retirement Benefits

How to Maximize Your Social Security Retirement Benefits

As you get closer to retirement, you may start to think about collecting social security. According to the Social Security Administration, 68 million US citizens collected Social Security benefits in June 2019. Many people, however, plan to keep working at least part-time after they can begin collecting Social Security benefits. This can impact your taxes significantly – here’s what you need to know about the financial consequences of working during retirement.

When can I collect Social Security? 

The Social Security Administration will allow you to collect 100% of your retirement benefits at your “full retirement age.” Your full retirement age is determined by your birth year. For 2019, the full retirement age is 66 years and 6 months. However, by 2022, the full retirement age will increase to 67 years.

You do not need to reach your full retirement age to begin collecting Social Security. Workers are eligible to begin receiving benefits once they turn 62. Yet, experts at the AARP recommend waiting for your full retirement age. This is because from ages 62 – 70, your benefit grows by approximately 8% per year for every year you hold off enrolling in Social Security benefits. That means if you wait until age 70, your claim could be 76% higher than if you start getting monthly payments at age 62.

Can I work longer to receive more from Social Security? 

Not necessarily. The Social Security Administration bases how much you receive on your 35 highest-earning years. You should delay applying for benefits for the reasons we outlined above, but the amount you receive from working part-time is only going to impact your benefit if you make more than an amount you made previously. For example, if you had several years of low or no income within the last 35 years, then you may benefit from working longer. The biggest benefit of working part-time is to give yourself some extra income, thereby delaying the need to take Social Security before you reach the age of 70.

Can I put my Social Security benefits on hold if I go back to work? 

It’s possible to suspend your Social Security benefit when you reach your full retirement age. By suspending your benefits, you will stop receiving your checks. However, you will also earn a “delayed retirement credit.” This credit boosts the amount you will receive by 8% per year until age 70. So, if you can suspend your benefit, you will receive significantly more after you turn 70 than you would once you reach your full retirement age.

To suspend your benefits, you will need to get in touch with the Social Security Administration by phone, in person at your local Social Security office, or in writing. You can change your mind again before you turn 70, or once you turn 70, the SSA will automatically start to deliver your benefits in the higher amount. It’s important to note that when you suspend your benefits, this means you will also suspend the spousal benefit your partner may be receiving. However, there’s an exception. Divorced spouses will be able to continue to receive their benefits.

Will I be taxed on my Social Security Benefits?

Yes, you will be taxed a certain amount by the IRS on your Social Security benefits. No matter what your income, know that no one will pay taxes on more than 85% of their Social Security benefits. The people who pay taxes on SS are those with a total income of more than $25,000 for an individual or $32,000 for a married couple filed jointly. Below those income levels, your benefits will not be taxed.

The IRS taxes Social Security at the following rates, according to the AARP:

  1. 1. up to 50 percent of your benefits if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly.
  2. 2. up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple).

State Taxes on Social Security Benefits

Depending on where you live, you may also have to pay state income taxes. 37 states (Including New York) do not tax Social Security income.

Can I delay taking the required minimum distributions if I’m still working?

For tax reasons, the IRS requires those over the age of 70.5 to begin taking certain amounts of their retirement fund. The exceptions are when a worker has a Roth IRA or a workplace plan, such as a 401(k). It’s possible to delay taking benefits from your current job’s 401(k) until you leave your job. Roth IRAs don’t mandate that you take minimum distributions unless they are inherited.

Can I add to my retirement funds if I’m still working after 70.5?

Only certain types of funds will allow you to contribute more money if you’re still employed after 70.5. Roth IRAs, a current employer’s 401(k), or a self-employed person’s SEP-IRA or solo 401(k) are all eligible for you to continue to add money to the account. That said, you must take the minimum required distribution (as outlined above). You may not continue to contribute to a traditional IRA if you’re over the age of 70.5 years.

How does Medicare factor into my Social Security benefits?

It’s a common misconception that Medicare and Social Security go hand in hand for retirees. However, your Social Security benefits can begin as early as 62; Medicare coverage only begins when you turn 65. And, it’s important to know that if you delay your Social Security, you will still need to apply for Medicare. If you’re already receiving Social Security when you turn 65, the SSA will automatically enroll you in Parts A and B of Medicare. But, if you’re not receiving your retirement benefits, contact the SSA. The open enrollment period begins three months before you reach 65 and extends three months past the month you turn 65.  If you still maintain medical insurance coverage through a current or former employer, you still need to make Medicare enrollment decisions to preserve your rights and avoid penalties.

If you’re planning for retirement, get in touch with one of the experts at for advice on how to save, make the most of your tax deductions, and gain maximum advantage from your Medicare and Social Security benefits.

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