Social Security provides a vital financial resource in retirement. But for most retirees, it's not a big one. The average monthly Social Security payment to retired workers amounts to just $1,620. That's not enough for most people to live on.
However, there are several things you can do to increase your Social Security benefit, and they're not all as hard as you think. Below, we'll look at three different ideas you can use either alone or in tandem to help give you a bigger Social Security check each month.
1. Increase your average monthly pay by $313 a month
The amount of your Social Security benefit 3depends on your primary insurance amount, which in turn is driven by your earnings history. Specifically, Social Security looks at the 35 years in which you earned the most on an inflation-adjusted basis, and it then takes your work history to determine your average indexed monthly earnings. A primary insurance amount of $1,620 corresponds to average monthly earnings of just over $3,200.
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If the average benefit recipient wants to increase the primary insurance amount -- and therefore, the monthly check at full retirement age -- by $100, average indexed monthly earnings have to rise by $313. That would require raising a full-time salary of around $38,500 to nearly $42,250.
Those who expect to claim their Social Security before full retirement age need an even bigger increase in salary. That's because each extra dollar of earnings produces less of a boost to Social Security checks when you file an early claim -- up to 30% less in some cases.
2. Work an extra 37 months
If you haven't worked a full 35 years in your career, then the Social Security Administration just puts zeros in the formula that determines your lifetime average earnings. If you work longer to fill up a full 35-year earnings history, then it can boost your benefits considerably.
For instance, someone with a salary that's the equivalent of $42,250 per year would be eligible for $1,620 in monthly benefits after working a little less than 31 years and 11 months. But if you keep working the extra three years and one month to have a full 35-year history, then you'll earn an extra $100 that will go toward your check. Again, this applies only if you claim at full retirement age, with earlier claims getting you less of a positive effect from your extra work.
3. Wait to claim for nine months after reaching full retirement age
Lastly, you can increase your Social Security retirement benefit by waiting longer before claiming. For every year you wait past full retirement age, you increase your monthly payment by 8%. So in order to take your benefit from $1,620 to $1,720, you'd need to work about nine months longer.
The effect of waiting longer if you were planning to claim early can differ depending on your exact age when you claim. However, the results are generally similar to this, with added rewards for waiting a while longer before taking your Social Security checks.
Get as much as you can
None of these things are easy to do, and they all involve making sacrifices. However, the payoff can be even greater than just getting a bigger Social Security check. If you can boost your income just a small amount, it'll also free up more money to set aside in retirement savings to supplement your Social Security. For most Americans, that's the key to true financial independence, and it makes for a much more comfortable and secure retirement.
