A Quick Social Security Review That May Increase Your Lifetime Benefits

Retirement planning can be complicated, but there are a few straightforward steps that may help you increase your lifetime income.

This short checklist can help you review your situation and see whether you may be missing out on money you could receive.

1. Review your earnings history

Begin by checking your Social Security information. You can create an account or sign in on the Social Security Administration website to review your lifetime earnings and get an estimate of your future benefits.

That record shows how much you may receive, and it also gives you a chance to catch mistakes in your reported income. Fixing errors now could lead to larger checks later.

2. Think carefully about when to claim benefits

Waiting to file for Social Security can increase your monthly payment. If you claim at age 62, the maximum benefit is $2,969 per month, based on lifetime earnings. If you wait until age 70, that maximum can rise to $5,181 per month.

Benefits increase for each year you delay, and the growth rate rises to 8% annually after you reach full retirement age, which is 66 or 67 depending on your birth year, until age 70.

Delaying until 70 can make sense financially, but that is not realistic for everyone. Some people need the income sooner, and although working longer is one option, not everyone can return to work or stay employed.

3. Account for taxes and Medicare

Social Security is taxed less heavily than regular income, but it can still be taxable depending on your annual income. Withdrawals from a traditional retirement account are also treated as ordinary income, which can push you into a higher tax bill than expected.

Depending on your Social Security income, traditional account withdrawals, and other earnings, as much as 85% of your benefits may be taxable. For that reason, it often makes more sense to claim benefits after retiring, when your income is lower than it would be while you are still working.

You should also consider Medicare Part B premiums, which are automatically taken from your Social Security payment if you receive benefits while enrolled in Medicare. If you delay Social Security, you will be billed directly for Medicare premiums instead, so those costs do not go away either way. Still, it is wise to calculate whether Social Security will cover your needs while accounting for Part B premiums, which reduce your monthly check.