As per the most recent data, the average monthly Social Security benefit for retired workers was $1,662.79. But there's huge variation in the checks that seniors receive.
The current maximum monthly Social Security payout is $4,194, more than $2,500 above the average benefit. Here are the three things you can do to increase your payments.
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1. Make sure you have at least 35 years of earnings
Your Social Security benefit will be based upon the average earnings of your 35 highest-paid years. That means that it's important to have at least 35 years of income to factor into the calculation. If you've reached a higher salary, it can benefit you to work additional years. By adding more years of high income and bumping years of lower income out of the Social Security income calculation, you can significantly improve your benefit.
2. Maximize your earnings
Making more money is easier said than done, but it will have a dramatic impact on the benefit you receive in retirement. This means that taking on a side job, or considering a potential change of career that offers more income, could be a path to getting a bigger monthly check.
In 2022, the maximum taxable amount of income for Social Security is $147,000, and having equivalent earnings across 35 years of work will help you increase your Social Security distribution. That means that earning the inflation-adjusted equivalent of at least $147,000 across 35 years is the first step in qualifying for the maximum monthly benefit of $4,194.
3. Wait longer to claim Social Security
People become eligible to receive payments at age 62. Meanwhile, the Social Security Administration (SSA) considers full retirement age (FRA) to be between 66 and 67, depending on when you were born, and you'll have to weigh the pros and cons of when to start taking benefits based on your individual situation.
Taking Social Security at 62 will reduce your monthly distribution by 30% compared to what it would have been if you waited to take payments at FRA. If you've met the maximum taxable amount across the average indexed monthly earnings (AIME) period over 35 working years and begin taking Social Security payments at 62, your monthly benefit will be $2,364.
However, in order to meet the maximum monthly Social Security benefit of $4,194, you need to have a full retirement age of 66 and wait until 70 to claim benefits. Up to age 70, each month that you delay taking benefits increases the monthly distribution you receive, working out to an 8% increase on an annual basis.
What if you can't hit the maximum benefit?
Don't despair if it looks like you aren't on track to hit the maximum benefit. According to the SSA, just 6% of workers met the maximum taxable earnings threshold in 2020. And you might have good reasons to take payments at or before FRA.
It's rare that an individual will qualify for the maximum monthly Social Security benefit, so you should concentrate on boosting your benefit instead of worrying about falling short of the max distribution, and make decisions about other aspects of the program with your individual situation in mind. With the understanding that most people will not qualify for the maximum benefit, it's a good idea to have other retirement strategies in place instead of relying fully on Social Security to fund your lifestyle in your later years.
