The average person who signed up for Social Security in the past year was awarded $1,413.08 per month in benefits; however, benefits vary depending on a person's work history, so careful planning can allow you to receive a lot more than that amount.
The raw numbers
In the 12-month period ending June 2017, over 2.9 million Americans signed up for Social Security benefits. On average, these retired workers were awarded $1,413.08 in monthly benefits, however, the average benefits payable were quite different for men and women.
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In the period, 1.4 million women filed for Social Security benefits, and their average award was $1,231.50. Men, however, were awarded $1,583.77, on average.
Wage inequality arguably plays a role in women's lower average payment, but so, too, does Social Security's formula, which penalizes individuals who take time off from their career to raise children. Social Security calculates benefits using the 35-highest income earning years, but if someone doesn't have 35 years of work history, it uses zeros in its calculation for any years without income.
Boosting your benefits
Undeniably, the single best way to boost your Social Security benefits is to ask for a raise at work. If you have fewer than 35 years of work history, more high-income-earning years will help offset any zeros in your history. Also, if you have more than 35 years of work history, you should know that high-income-earning years replace low-income years in the calculation, which also increases the amount you receive in benefits.
If a raise isn't in the cards, then another way to boost your benefits is to plan on retiring later, so that you have fewer zeros in your calculation. Retiring later also provides the benefit of delayed retirement credits, which are awarded to individuals who hold off on claiming Social Security benefits until after they've reached full retirement age, or the age at which a person can receive 100% of their benefit amount.
As a refresher, Social Security can be claimed as early as age 62. However, claiming before full retirement age results in a reduced payment. If you were born in 1960 or later, then your full retirement age is 67. Wait to claim your benefit, and you'll have more high-income-earning years used in your benefit calculation, and you'll receive an 8% increase in your benefit for every year you delay, up until age 70, because of delayed retirement credits.
If you're divorced, you may also qualify for benefits based on your former spouse's work record. Depending on the circumstances, you could earn up to 50% of the amount that your spouse qualifies for at full retirement, and it won't affect your former spouse's payment, or the amount your spouse gets in lifetime Social Security benefits.
Furthermore, if you have a spouse who didn't work, or who has a work history that results in a monthly benefit that's below average, it might pay off for your spouse to collect benefits based on your work record, rather than his or her own. Spouses can receive up to 50% of your full benefit at full retirement age, and Social Security will automatically pay the higher of the two benefits, so no need to do the number crunching yourself.
What else should you keep in mind?
If you do claim early, don't fall into the Social Security trap of earning too much money while collecting Social Security benefits. If you're receiving benefits and you haven't reached full retirement age, your monthly Social Security check will be reduced by $1 for every $2 you earn above $16,920. You won't lose this money, however. It will be added back into your benefit calculation, and it will increase your payment once you reach full retirement age. After reaching full retirement age, you can earn as much as you like without having it reduce your Social Security check.
It also pays to avoid the Social Security tax trap. Up to 85% of your Social Security income can be subject to income tax if your income exceeds certain levels. In 2017, if you file a joint return and you and your spouse have combined income between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits. If you earn over $44,000, then you'll be taxed on up to 85% of your Social Security.
