The average senior claiming Social Security benefits in February 2022 received $1,663 per month. That amounts to just under $20,000 per year. While it's no small sum, it's probably not going to cover all of your retirement expenses. Fortunately, there are ways to squeeze a little more out of the program. The following three moves can boost your Social Security benefit considerably.
1. Boost your income now
Your Social Security benefit is based on your average monthly income during your 35 highest-earning years, adjusted for inflation. So anything you can do right now to raise this average will also help your checks later.
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There are different ways to go about this. Switching employers might help if your new job pays a higher salary. Getting a raise at your current job also works. You could also start a side hustle or work overtime to bring in some more money. Or try a combination of these methods.
The only people this tip won't work for are those who already expect to earn over $147,000 in 2022. This is the maximum income subject to Social Security taxes this year, so earning anything over this won't boost your benefits any further.
2. Work at least 35 years
When increasing your income isn't an option, try working longer. As I mentioned above, your Social Security benefit is based on your income over your 35 highest-earning years. Since most people earn more later in their careers than when they first started out, working longer tends to boost their Social Security benefit. After they pass the 35-year mark, their later, higher-earning years start to replace their earlier, lower-earning years in their benefit calculation, resulting in larger checks.
If you weren't planning to work for at least 35 years, you might want to rethink that. Those who work for a shorter time see zero-income years factored into their benefit calculation. This can significantly reduce the benefit you qualify for.
For example, if you earned $50,000 per year, adjusted for inflation, for 35 years, your standard benefit amount would be $1,927 per month, based on the current Social Security benefit formula. But if you only worked for 34 years instead, your benefit would shrink to $1,889 per month because you'd have a zero-income year included in your calculation. That's $38 less per month just from one year less of work. If you collect Social Security for 20 years, that's $9,120 lost.
3. Delay benefits if it makes sense
The age you sign up for Social Security also has a huge effect on the amount you receive each month. In order to get the full benefit you're entitled to based on your work history, you must wait until your full retirement age (FRA) to sign up. That's anywhere from 66 to 67, depending on your birth year.
You can sign up as early as 62, but claiming sooner than your FRA reduces your checks. They will be 25% smaller if you sign up at 62 and your FRA is 66. If your FRA is 67, you'll get 30% smaller checks by signing up right away at 62.
And every month you delay benefits increases your checks slightly until you hit the maximum benefit at 70. This is 124% of your full benefit per check if your FRA is 67 or 132% if your FRA is 66.
Delaying benefits this long can grow your checks considerably. If you qualify for the average $1,663 benefit at your FRA of 67, you'd get $2,062 per month by delaying benefits until 70. But that doesn't mean delaying is the right choice for everyone.
If you don't expect to live long or you can't afford to cover your expenses without Social Security, signing up earlier probably makes more sense for you. Those with short life expectancies often get more out of the program by signing up early, whereas if they delay, they might not get anything if they die before they planned to sign up.
These tips might not all make sense for you right now, but keep them in mind as you approach claiming age. Your financial situation and retirement goals might change over time, and that can affect how you approach Social Security as well.
The government might also make changes to Social Security over time that affect the size of your benefit. Should this happen, set aside some time to rethink your Social Security strategy to ensure you're taking all the necessary steps to maximize your benefit.
