A bigger Social Security benefit can go a long way toward providing more retirement security. While you'll always need savings to supplement your benefits, increasing the amount of your checks means getting more guaranteed lifetime income that's protected against inflation.
For the typical retiree, the average benefit in 2022 is just $1,657, which, as you can see, won't cover all of your costs. But the good news is, you may be able to beat this amount by quite a bit. In fact, the maximum benefit is a whopping $4,194 per month, although earning so much is out of reach for most retirees.
So, how can you up your own benefits above average? Just take these three steps.
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1. Earn more than your fellow Americans
Social Security benefits are calculated based on average wages. If you want a benefit that's bigger than what the typical American receives, you'll thus need to earn more than your peers. And you'll need to do so over a long period of time, because the average wage used to set your benefits is based on what you earned over the 35 years when your income was highest (after adjusting for inflation).
The sooner you can start earning an above-average salary -- and the higher your wages are compared to your fellow Americans -- the more your checks will exceed the $1,657 average benefit. You can do this by developing specialized job skills, or by simply putting in more hours than most people, as money from a side hustle increases the wages that count when your benefits are calculated.
2. Claim benefits later than your peers
Claiming Social Security at a young age is popular. In fact, most people start checks as soon as they can at age 62. The problem is, the younger you are when you claim benefits, the lower your monthly income will be.
Seniors who claim benefits before their designated full retirement age lose part of their standard benefit due to early filing penalties. The penalties reduce benefits by a small amount for every month a retiree gets them ahead of their FRA. The reduction ends up adding up to a 6.7% decrease in monthly benefits for each of the first three years a retiree gets a check ahead of FRA. For those who start payments really early, an additional 5% penalty applies each prior year.
Full retirement age is set based on birth year, and the designated age to get your standard benefit is between 66 and 4 months and 67. If you claim at 62 with a FRA of 67, you'll face a 30% reduction in monthly payments. This would likely leave you with a benefit well below the average.
If you'd rather get more than the $1,657 the typical retiree receives, waiting until after full retirement age is the way to go. For each month you put off getting a payment following your FRA, a delayed retirement credit is available. These credits add 2/3 of 1% per month to your standard benefit and can be earned until age 70. The credits can boost your benefit by as much as 24% if your full retirement age is 67, so it can be really beneficial to wait as long as you can if your goal is the largest monthly payment possible.
3. Enlist your spouse's help
Finally, if you're married, working with your spouse to develop a joint Social Security claiming strategy can go a long way toward helping you bring your benefit above the average.
Say, for example, you and your spouse both want to retire before age 70. Rather than both of you claiming benefits -- and thus shrinking both of your checks -- you may want to have the lower-earning partner claim their retirement checks to provide income while the higher earner delays. Putting off a benefits claim for the spouse who earned more can result in a big benefits boost, and can increase survivor benefits as well.
The more of these techniques you employ, the better your chances of an above-average benefit. Start working on them ASAP by boosting your earnings if you're still on the job, or by finding a way to put off your benefits claim if you're nearing the end of your career. These sacrifices can have a huge effect on the income you have in your later years.
