4 Easy Ways To Increase Your Social Security Benefits

Are you about to take your Social Security? Well, wait. I'm going to give you four simple strategies on how to maximize your income from Social Security. My name is Matthew Copley, President and CEO of Copley Financial Group, and I want to help you maximize your income and minimize your taxes. So the first thing you have to know about Social Security is how they calculate how much income you get. So they base it on your 35 highest earning years. What does that mean? They actually take a look at all of your previous work history and they actually pull up all those old years to today's value dollars. For example, if you earned $176,100 in 2025, it is worth the same as earning $39,600 in 1985. So they pull up all those old years to today's value dollars. Once they pull up all 35 of those years to today's value dollars, they line them up and it's your 35 highest earning years that they use for their calculation. So it's important to understand that the 35 years is a big deal. If you only have 30 work years, they're factoring five zeros into that equation. So that's gonna really pull down your numbers. So one way that you can maximize the income that you get from Social Security is to just have 35 work years. And you don't necessarily have to have a lot of income in every year. In fact, the way Social Security works is they weight the income based on the initial income you receive. It has a much higher weighting in their calculation than income that you receive later. For example, on about the first $7,000 of income each year that you make, you get a 90% weighting on that income. Then you have another chunk of income that has a much, much smaller weighting down to about 32%. Then you have an even smaller weighting on the rest of your income all the way up to the cap. And again, the cap is different every year. This year in 2025, it's $176,100. Again, 40 years ago, 1985, it was only $39,600. Those are equivalent. So it's important to understand having your 35 work years is very, very important. Now, another thing that you might consider if you're lucky enough to be a small business owner is you might be able to control your income. There may be a way that you can receive some extra income as a small business owner. You can pay yourself a salary. Maybe you have a business. I've had clients with businesses where one person is collecting a salary to make sure everything is kosher with the IRS. Someone's collecting W-2 income. But maybe their spouse is also working in the business, but they're not collecting any salary. Well, if you already have 35 good work years and your spouse only has 30 work years, maybe adding some of that income onto your spouse for the next five years could make a huge impact on how much Social Security you collect. Because if you already have 35 good work years, working another year is not doing a whole lot to your numbers because they're deleting an old year to add a new year. And that old year is worth a lot more than you think because of that inflation adjustment. What if you're not a small business owner? Well, just go out and get a part-time job. Again, because of the weighting of how Social Security calculation works, you might only need to make 10 or $12,000 for the whole year in order to really affect your numbers. It's really important you get to 35 years of employment. The second thing you should seriously consider on how to maximize your Social Security income is taking advantage of spousal and or survivor benefits. This is for people who are married or maybe even someone who used to be married can qualify for spousal or survivor benefits. What is that? That is when someone goes to Social Security and says, I don't wanna file for Social Security based on my own work history, my own 35 years. I wanna file for Social Security based on my spouse's work history. Now, this doesn't affect your spouse at all. It doesn't reduce their benefit, doesn't change anything for them. But you can apply for Social Security based on your spouse's work history. Now, how it works is you can earn up to 50% of what your spouse gets at their full retirement age at your full retirement age. So if your spouse qualifies for $2,500 a month, say at their full retirement age, say age 67, you might qualify for $1,250 a month when you turn age 67. Now, why would someone wanna take the spousal benefit and they only get 50% instead of their own benefit? Well, maybe 50% of their spouse's number is higher than 100% of their own number. They get more money. That brings up the other benefit, the survivor benefit. This is so important for people to understand. It is the most overlooked benefit when taking a look at when to take Social Security. And if you are a married couple and both of you are collecting Social Security, what happens when one person passes away? One of those Social Security checks passes away too. But it's important to understand what the survivor gets. The survivor gets the larger check. This is so important for you to understand. If I have two people, husband and wife, they're both collecting $1,000 a month, that's 2,000 together. But if one person passes away, the survivor gets 1,000 a month. If that same couple just decided that one person was gonna take their Social Security early and get 750 a month, and the other person's gonna delay a couple years and get 1,250 a month, it's the same 2,000 a month together, 750 plus 1,250. But now when one person passes away, the survivor gets 1,250 a month. That's a 25% increase in the survivor's income for the rest of their life, which brings up something really important, the way Social Security has their cost of living adjustment. Every year, the Social Security payment goes up based on the government's official inflation rate, which means that if the survivor benefit is 1,250 a month, all those inflation adjustments are gonna compound on top of each other every single year. Now, obviously, this is a lot more important when I have couples that have a bigger age gap. Maybe they're more than two years difference in age. Maybe they're three, four, five, six years difference in age. Or maybe I have one person has a much larger check than the other person. So we need to make sure that we're maximizing the correct check. The third thing you might wanna consider when taking your Social Security and how to maximize it is you might wanna wait longer to collect. The reason this is so important is when people oftentimes try to decide when to take their Social Security, they have their printout from the government's website and they know exactly what they're gonna collect. If they're 62 years of age right now and it says they get a certain amount at age 62, it's an accurate number. But if that same piece of paper says they get a certain amount at age 70, say $3,000 a month, that is a wildly inaccurate number. In fact, the real number is over $4,000 a month. And that's because that piece of paper does not take into account something really, really important, which is that cost of living adjustment or COLA. If you wanna learn more about COLA in detail, click on the link. The way that the COLA works is that every year the government increases everyone's Social Security by whatever the government's official inflation rate is. If we look back at history and what that official inflation rate has been, it's nearly 4% every single year. And that compounds on top of itself. It's important to understand if you get 4% adjustment on $1,000, it's an extra $40 a month. But if you get a 4% adjustment on $1,500, it's an extra $60 a month. Compounding, compounding, compounding throughout your entire retirement. And depending on whether or not we have a big inflation year, this could have a huge impact on the rest of your income. For example, if you were age 67 in January of 2023 and you had waited to take your Social Security income, you actually got a 16.7% increase in the amount of income that you got every month from what it was one year ago. Just waiting one year, you got an extra 16.7%. That is correct. Because someone at age 67, January of 2023, would have received an 8% increase for delaying taking their Social Security. And they would have also received an 8.7% inflation cost of living adjustment. Those two together now make a much larger check. And then every single inflation adjustment for the rest of their retirement is gonna compound on top of itself. Again, if you wanna learn more about COLA, click on this link. Now, one important consideration when thinking about delaying or waiting to collect your Social Security is what is referred to as the break-even point. This is the point that you need to live in order for this to be a good financial decision. For example, if you could have taken your Social Security at 62, but you wait until 66, that's four years of payments that you are not going to collect. You have to make up the sum total of those four years of payments with the larger checks in the future. So for example, when we run our computer algorithm for all of our clients here in the office, we actually tell them where those break-even points are. We say, if you take your Social Security here, you gotta live this long. If you take it here, you gotta live this long. And if you take it here, you gotta live this long. Now, when you think about how long you're gonna live, most of us are gonna say, I don't have a crystal ball. I don't know how long I'm gonna live. But we can use reasonableness. In fact, if you just use the averages, if someone is 62 years of age, their life expectancy, their median average life expectancy is 22 years. So we know the average person at age 62 today is gonna live to be 84. Now, it's different for everyone. So there are people that live to be 104, and there's people that pass away at age 63. So you seriously have to consider your individual situation. You might not wanna just use that 22-year average. However, if you do use that 22-year average, what ends up happening is it says you should delay as long as possible. In fact, the math says you should wait all the way to 70. Now, this is interesting because the Social Security Administration, I feel like they are misleading a lot of people on what these numbers are. In fact, they used to have a calculator on their website that showed this information, and they removed it. And I think it's because they want to encourage people to take it earlier. Now, why would the government want to encourage people to take their Social Security earlier? Because it's saving the government a lot of money. In fact, you used to have to be 65 years of age to take your Social Security, and they bumped it down to age 62. Now, why would they do that? I mean, everything that you seem to hear online, it says maybe they need to increase the Social Security age to save the program. That is not true. The way that they saved the program and the way they've done it in the past, and they'll probably do it in the future, is actually reduce the age that people can collect and at a much smaller payment. See, what they did is when they moved it from 65 to 62, what it did is save the government billions of dollars because they knew that a lot of Americans would take their Social Security at 62 because they didn't understand the cost of living adjustment, they didn't understand life expectancy, and the government knows that when you give someone the option of getting it earlier, a lot of them are going to take it. It ends up saving the government a lot of money. So you need to do the math. You need to determine based on your situation what is a reasonable life expectancy. Now, if you say to yourself, you know, my parents lived into their late 80s and the doctor says I'm doing great and I eat healthy and I get exercise, there's probably a good chance you're going to outlive the average person that's out there. And someone that maybe smokes three packs of cigarettes a day and likes to drive their motorcycle between the cars on the highway at rush hour, probably you should take it earlier because your life expectancy is a little less than the average person. But I want you to seriously think about the life expectancy part of this because it's a huge factor on when to take your Social Security. Now, I would argue if you have average life expectancy and average health, probably should wait longer to take your Social Security and that's why it makes a lot of sense to wait to collect. Now, why would someone want to take it early if mathematically it's probably better for them to delay? Well, there's a lot of people out there that we do recommend that you take it earlier. Obviously, we talked about this. If you're in poor health and you're not going to live as long and you're not going to hit that break-even point, then you might want to take it earlier than the averages. Now, another reason someone might want to take it early is because there's another benefit that Social Security offers that they don't get to collect unless they file. For example, a spousal benefit. A person filing under a spousal benefit does not get to collect that benefit until the other person has already filed for Social Security. So, it may be smarter for someone to file earlier so their spouse can start collecting that spousal benefit as well. Now, it's important to understand that taking it early reduces both benefits. Your own benefit plus your spousal benefit as well. So, that's something you really want to look at the numbers. Now, another reason is maybe there's another benefit like if you have a child. If you were the guardian of someone under the age of 18, there is a minor benefit that the Social Security Administration can provide. So, you might want to be able to collect your own benefit so you can also collect that survivor benefit. Finally, the last person that might want to take their Social Security early, as early as possible, is they just need the money, right? They hate their job, they hate their boss, and they need the money to pay their bills every month. Well, we might actually come up with a strategy on how to maximize your Social Security by taking it at the right time and still retire early. What if the optimal time to take your Social Security is 66 and you want to retire at 62 and you really need that $2,000 a month to pay the bills? Well, have you saved any money outside of Social Security? Maybe IRAs, 401Ks, 403Bs, DSPs? If the answer is yes, could you use some of that money for a few years? Could you spend those accounts down for a few years in order to maximize your Social Security? Well, yes, you could, but why would you do that? Well, I want you to think about how those different types of income are taxed, okay? First of all, if you delay your Social Security, you end up getting more on your Social Security check guaranteed. If you delay taking money out of your 401K, account balance isn't guaranteed to go up. Depends on the investments that are in there. But the real thing is the taxes. If you start taking money out of an IRA or a 401K, with the exception of a Roth IRA, it's fully taxable by the federal government. It's fully taxable by the state. So you want to take a look at that income as less valuable. Because if you start taking money out of Social Security, you pay less federal, maybe none, and no state tax in most states on Social Security income. So if you have income that you are paying less taxes on versus income you pay more taxes on, which income do you want more of? You want more of the income you pay less taxes on. You don't want more of the income you pay more taxes on. So it makes a lot of sense to reduce those qualified retirement accounts down in order to maximize Social Security. But it's actually a double whammy because what ends up happening is by reducing your IRAs and 401Ks, you also reduce the calculation on Social Security taxation, which allows you to get even more income from Social Security and again pay even less taxes. And that brings up the fourth way you want to maximize your Social Security income. And that is to understand how to reduce your taxes in retirement. Understanding exactly how Social Security income is going to be taxed for you. It depends on all your other income and where it's coming from to determine how much of your Social Security could be subject to taxes. And understanding that for you is very, very important. Some income that you collect, you pay no taxes on at all. Things like Roth IRAs, things like passive income that you can use depreciation for real estate or depletion for royalties. Those are not subject to taxation. So understanding that you want to increase potentially how much you're getting from Social Security where you pay less in taxes. So remember, the four things that you should consider on how to maximize your Social Security benefits is number one, make sure you have your 35 years. Number two, make sure you take advantage of the spousal or survivor benefits and how to maximize those benefits. Number three, make sure you're collecting at the right time and you may want to wait to collect to get the most money out of retirement. And number four, make sure you understand how your Social Security income is going to be taxed and how you might be able to collect more income and pay less taxes on that income. My name is Matthew Copley and if you want to learn how we help our clients maximize their income and minimize their taxes, check out the rest of our videos or visit our website.