Social Security provides lifelong, inflation-adjusted, government-guaranteed income-and it makes sense to maximize it. To maximize social security benefits, we need to understand some rules that regulate Social Security benefits.

First, there are three retirement ages in terms of social security benefits. Early retirement age is 62 when you can begin receiving benefits; full retirement age was 65 originally when social security was designed, now it is gradually being pushed up to age 67. If you were born between 1938 and 1959 it will be between ages 65 and 67. If you were born after 1959 full retirement is age 67. Be aware of that there is a possibility for this to increase again. Delayed retirement age is 70.

One of the most important factors that determine how much you are entitled to receive from you Social security account is your earnings throughout your career. Although the benefits calculation is based on the date you reach full retirement age - which is age 66 for those born between 1943 and 1954 - you can choose to take benefits as early as age 62 or to defer them to as late as age 70. Choosing to take benefits early will reduce your payments, while deferring benefits increases them.

For married couples, maximizing the benefits becomes little bit complicated, you need to consider not only your own retirement benefits, but also the survivor benefits your spouse will receive after you die. Several options are available to couples that can make a big difference in the total amount they receive from Social Security during their retirement years. If one spouse earned substantially more than the other spouse during their careers, then using the higher-earning spouse's work history often gives the other spouse a bigger check every month. In addition, your surviving spouse is entitled to receive benefits after you die. That means the choices you make with your own benefits have an impact on what your spouse will receive after you're gone.

You may choose whichever retirement age you want, but your benefits vary considerably at different ages. You could retire as early as age 62. But you have to pay a price for doing that by permanently reducing your Social Security benefits for future years. For example, claiming benefits at 62 will lead to benefit deduction from 5.5% to 6.5% per year prior to full retirement age.

For single workers, especially those with little savings, working as long as possible is one of the best ways to maximize their Social Security benefits. You can delay taking Social Security through age 70. Your benefit will increase, depending on your date of birth. For those turning 62 after 2004, there is an 8% yearly increase in benefits for each year delayed retirement beyond the full Social Security retirement age up to 132% of your normal retirement benefit at age 70. There is no percentage benefit to delaying retirement beyond age 70.
In addition, you may start collecting benefits at the same time keep working. If that is the case, be aware that there is some earning limit for working claimants. Above that earning limit, you will forfeit $1 of benefit for every $2 earned, which in many cases could off set the benefit altogether. So, plan carefully if you want to keep working after you start collecting benefits and keep your earning under the limit.

Married couples face the most challenging timing decision, especially when there is a big difference in the couple's income. A key to maximizing a couple's benefits is to increase the value of the survivor benefit. The lower-earning spouse is entitled to three types of benefits: 1). Benefits based on his/her own earnings; 2). A spousal benefit equal to 50% of his/her spouse's benefit if it exceeds her own; 3) A survivor benefit equal to 100% of his/her spouse's benefit after the spouse dies.

Married women generally are better off claiming benefits at the early-retirement age of 62, and their husbands generally should wait until 69. The wife's benefits will be reduced if she claims before she reaches full retirement age, but her decision will not affect her survivor benefits, which she can receive after her husband dies.

If the lower-earning spouse is the wife and her earnings produce a benefit that's 40% or more of her husband's, she should claim at 62, although her retirement benefit would be permanently reduced if she collected early, she would still be entitled to her full survivor benefit as long as she was at least 66 when she collects it. To maximize survivor benefit, the husband should delay benefits as long as possible or claim benefits at 69.

A husband who delays collecting the benefits until age 69 is actually helping his wife in the long run by increasing the value of her survivor benefit. At the same time, the wife is bringing Social Security dollars into the home for the longest period possible by claiming benefits at age 62.
If a husband collects at 62, his benefits and his wife's survivor benefit will be reduced by 25%. If he waits until his full retirement age of 66, his widow will get his full benefit. Each year he delays until age 70 will boost his own and the survivor benefit by 8%.

If a woman's relative earnings are equal to 30% to 40% of her husband's benefits, the couple's decision should be based on their age difference. If they're the same age, the husband should hold off until 67 and the wife should wait until 66. The couple will spend most of the retirement period together, during which they'll be enjoying 100% of both his and her benefits. If the wife is three to six years younger, she should take her benefits at 62 and he should claim at 69 to maximize survivor benefits.

Finally, wives with the lowest relative earnings should collect a spousal benefit when her husband retires. If there's an age difference of five or six years, he should wait until 68 and she should collect at 62. If they're the same age, they should both collect at 66; the spousal benefit is less important because they'll be spending most of their retirement together.

In summary, to maximize social security benefits, one need to make more and pay more social security tax, delay collecting benefits as long as possible until 70 years old, and coordinate couple's timing for collecting the benefits.