6 Ways to Maximize Your Social Security Payout

[For pointers on what you should be doing now, see this Retirement Timeline.]

Marital strategies. Couples have more options to maximize their Social Security payouts. Married workers are entitled to Social Security benefits based on their own earnings, or they may receive a payout equal to 50 percent of their spouse's benefit. The amount is lower if either party collects before full retirement age. Although it's generally better for single men to claim early because of their shorter life expectancy and for single women to delay claiming because they are likely to live longer, the opposite is true for couples wishing to boost their total payout. In general, couples can maximize their joint Social Security payouts by having the lower earner sign up as soon as possible at age 62 while the higher earner waits as long as possible to claim, ideally until age 70, according to Boston College. This strategy typically maximizes the couple's benefits. The husband is generally the higher earner, older than his wife, and has a shorter life expectancy, so the wife will get a smaller payout based on her own working record. But then she'll get bumped up to the higher survivor's benefit when her husband passes away. "For married women, the period over which they receive their own benefit is only until their husband dies," says Munnell. "Once their husband dies, they then claim the widow's benefit." The survivor's benefit for spouses is the full amount of Social Security the higher earner received. The longer the higher earner works, the higher the benefit his surviving spouse will receive. If one spouse doesn't have his or her own working record, the higher earner can claim and immediately suspend his retirement benefits at his full retirement age. This will allow the nonworking spouse to receive a spousal benefit based on the working spouse's earning record, while still allowing the worker to get a higher payout later for delaying claiming.

Claim twice. Couples with two incomes have an additional Social Security option. Each can actually claim Social Security twice. But there are a few caveats. Both husband and wife must have significant earnings, and at least one of them needs to be able to delay signing up until age 66. Although workers who file before their full retirement age get the higher of either a payout based on their own working record or a spousal benefit, those who wait until their full retirement age can choose which of those benefits to receive (and even receive both at different times). For example, if a husband claims his benefits at age 70, his 67-year old wife (who is above her full retirement age) can file for a spousal benefit based on his working record equal to 50 percent of his benefit. The wife can then continue working and contributing to Social Security, then file for Social Security benefits based on her own working record at age 70 and stop receiving the spousal benefit. In this scenario, the wife gains three years of spousal benefits. Plus, her own Social Security checks will be higher because she delayed claiming and spent more of her higher-earning years in the workforce. The cost: This Social Security claiming strategy could cost taxpayers as much as $9.5 billion per year. A significant amount of that additional money goes to upper-income households, according to a Center for Retirement Research at Boston College analysis.

[See Should Saving for Retirement Be Required?]