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3 Social Security Secrets for Even Bigger Checks | The Motley Fool

The higher a Social Security benefit you lock in, the more monthly income you’ll have to look forward to throughout retirement. So it pays to do what you can to raise your benefits as much as possible.

As a general rule, the more inside information you have on how Social Security works, the better-positioned you’ll be to eke out a higher benefit. But if you don’t have hours upon hours to devote to learning about the program, you can start out with these inside tips.

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1. Extend your career

Your Social Security benefits are calculated based on your average monthly wage during your 35 highest-paid years in the workforce. Many people wind up earning more money at the end of their careers than the beginning, or even at the midway point. If that’s the situation you land in, working longer could be your ticket to higher benefits.

Imagine that by age 67, you’ve worked a full 35 years and are earning $100,000 a year. But what if of your 35 highest-paid years of income, your lowest year of earnings had you making a mere $25,000? Granted, if that was years ago, that figure would be adjusted for inflation as part of the formula used to calculate your benefits.

But if you’re able to work an additional year, you can replace a $25,000 salary with a $100,000 in your personal benefits equation. The result? More money.

2. Boost your earnings with side income

Many people mistakenly think that work they do on the side won’t count toward their Social Security benefits. But when we talk about your benefits being based on your 35 most profitable years in the workforce, that refers to your total income.

If, in a given year, you earn a salary of $50,000 but make another $5,000 a year driving for a ride-hailing service and $2,000 more on top of that consulting on a freelance basis, you’ll have $57,000 in income factored into your benefits equation. All you need to do is report that side income to have it count — which, incidentally, the IRS requires you to do, anyway.

3. Move to a state that doesn’t tax benefits

Many seniors end up having to pay federal taxes on their Social Security benefits, and if your retirement income is high enough, that may be unavoidable. But the state you retire in could also impact whether you keep more of your benefits or not.

If your goal is to score the highest monthly benefit, you may want to avoid these 13 states, since they tax Social Security income:

  1. Colorado
  2. Connecticut
  3. Kansas
  4. Minnesota
  5. Missouri
  6. Montana
  7. Nebraska
  8. New Mexico
  9. North Dakota
  10. Rhode Island
  11. Utah
  12. Vermont
  13. West Virginia

It’s worth noting that most of these states offer exemptions on taxes for seniors who are low or moderate earners. But still, if you want to be sure you won’t be taxed on your benefits at the state level, you’ll need to avoid the names on this list.

Knowing the secrets to a larger Social Security check could put you in a great position to enjoy a more comfortable retirement. Be sure to employ these tactics to get as much money from Social Security as you can.


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