Social Security is a vital program for many Americans, providing a financial safety net for retirement, disability, and survivor benefits.
Your Social Security benefits are based on the contributions you make throughout your working life, which are determined by the amount of your earnings subject to Social Security taxes.
If you want to increase your future benefits or ensure you’re maximizing your contributions, there are several strategies to consider. Here are three easy ways to boost your Social Security contributions in the United States.
1. Increase Your Earnings
The most straightforward way to increase your Social Security contributions is by increasing your taxable income. Social Security taxes are applied to your earnings, up to a certain limit. In 2024, the Social Security wage base limit is $168,600. This means that if you earn more than this amount, your income above this threshold is not subject to Social Security taxes.
To increase your contributions, consider:
- Negotiating a Raise: If you’re employed, ask your employer for a salary increase or promotion that would raise your earnings above the current level.
- Pursuing Higher-Paying Jobs: Consider switching to a higher-paying job or industry, which would increase your taxable income and thus your Social Security contributions.
- Starting a Side Business: If you have skills or talents that can generate extra income, starting a side hustle or small business can boost your total income. Just be aware that income from self-employment is subject to both Social Security and Medicare taxes, so your contributions could increase significantly.
By increasing your earnings, you ensure that more of your income is being taxed for Social Security, which may help raise your future benefits.
2. Work Longer and Delay Retirement
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Your Social Security benefits are calculated based on your 35 highest-earning years. If you have years with low earnings or gaps in your work history, those years can lower your average earnings, which in turn reduces your benefits. To increase your Social Security contributions:
- Work for More Years: If you have fewer than 35 years of earning history, work additional years to replace low or zero-income years. The more years you work, the more Social Security taxes you pay, and the higher your average income over your working life becomes, potentially increasing your benefits.
- Delay Your Retirement: If you are able to delay retirement past your full retirement age (FRA), your Social Security benefit will increase by about 8% per year until you reach age 70. Even if you’ve already reached your FRA, delaying your retirement can result in a larger monthly payment. This strategy also increases your contributions to the system while you’re still working.
By continuing to work and delaying retirement, you increase both your contributions and the eventual benefits you receive.
3. Maximize Your Spouse’s Contributions (If Applicable)
If you are married, you and your spouse can work together to maximize your Social Security contributions and benefits. Here’s how:
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- Ensure Both Spouses Contribute: If both spouses are working, each can make contributions to the Social Security system, increasing the total household contributions. Make sure that both of you are working in jobs that are subject to Social Security taxes.
- Coordinate Benefits for Maximum Payout: If one spouse has a higher income than the other, the lower-earning spouse may be able to collect Social Security spousal benefits based on the higher earner’s work record. These benefits can be as much as 50% of the higher earner’s full retirement benefit, which can be a valuable addition to household income.
- Consider Survivor Benefits: In the event of one spouse’s death, the surviving spouse can receive benefits based on the deceased spouse’s work record. Ensuring that both spouses have significant earnings and contributions over their lifetime can increase the survivor benefits for the remaining partner.
By ensuring that both spouses are contributing to Social Security and making strategic choices around spousal and survivor benefits, you can increase the overall financial security for your household.
Conclusion
Increasing your Social Security contributions is a long-term strategy that involves earning more, working longer, and making thoughtful decisions about your retirement plans.
By focusing on boosting your taxable income, working for more years, and coordinating with your spouse, you can maximize your Social Security contributions and future benefits.
These steps will not only help you pay more into the system but also potentially raise the amount you’ll receive in retirement, disability, or survivor benefits when the time comes.