(TheDailyCurrents.com) – Social security is vital income for millions of seniors across the country. For some, it is supplemental; for others, it is their sole source of income. People are living longer than ever before, and many are working well into their 70s. Maximizing social security benefits begins by thinking ahead. Even if you are years away from even thinking about retiring, the following tips can help you make the most of it when you need it.

Like so many other things in life, the more you put into it, the more you get out of it. Not everyone understands how social security is calculated, or that there are ways to increase your future payouts. One of the biggest ways to maximize your social security is to delay gratification.

Why You Should Delay Your Benefits

While it might be tempting to collect your social security benefits at age 62, there are significant drawbacks. By taking social security at full retirement age versus early, you will make 25% to 30% more. It’s always a good idea to review the latest updates to social security policies, and to start thinking ahead. Doing so will help you maximize your retirement dollars.

Sometimes it is necessary to take your retirement early, but you should understand that waiting will give you a higher monthly disbursement amount. If you can hold off till age 70 you will maximize your social security benefits.

If you know you will have to take your retirement early, there are still steps you can take to increase your monthly payouts.

Work a Full 35 Years

Even if you plan to take your social security early, you can make the most of your future benefits by working 35 years and making as much income as possible.  It helps to understand how social security calculates your payments.

How Does Social Security Decide How Much I Get?

Social security uses a formula called Average Indexed Monthly Earnings (AIME) to determine your monthly payments. Social security uses the number of years you worked and then the highest indexed amounts of earnings to calculate your monthly earnings. Here’s what the social security website has to says:

“Up to 35 years of earnings are needed to compute average indexed monthly earnings. After we determine the number of years, we choose those years with the highest indexed earnings, sum such indexed earnings, and divide the total amount by the total number of months in those years. We then round the resulting average amount down to the next lower dollar amount. The result is the AIME.”

If you had years where you didn’t work, there is a zero dollar amount for those years. You can get around this somewhat if you work beyond age 60. Years where you work after you turn sixty can be used to replace a zero year. For this reason, increasing your income through a second job or side hustle to maximize income prior to retirement can help boost your social security monthly payments.

What About Social Security Tax?

If you continue working after you begin receiving social security benefits, you risk bumping yourself into a higher tax bracket. Pay close attention to your earnings and income at this point so you don’t end up paying higher taxes.

As much as 85% of your benefits can be taxed depending on your earnings, so you will want to keep close track of your earnings to avoid this. To understand more about taxes and your social security benefits, you’ll want to visit the social security website to calculate how much of your benefits are taxable based on your income.

If it looks like you are going to be paying 50% to 85% taxes on your benefits you may wan to consider either putting off collecting social security until you are ready to retire, or perhaps working part time.

It’s a good idea to review your retirement plan annually and to stay abreast of social security changes that may affect you.