If you're expecting to rely on Social Security benefits for a good chunk of your retirement income, you're not alone. For nearly half of unmarried beneficiaries and close to one-quarter of married couples, Social Security makes up more than 90% of income in retirement.
The problem with that scenario is that the average retiree receives just over $18,000 per year in benefits -- which is hardly enough for many older Americans to survive, let alone live comfortably. The good news is that if you're turning 62 in 2021, this Social Security move could boost your benefits by more than $800 per month.
Supercharging Social Security
How much you receive in benefits may seem out of your control, but the truth is that you have the power to change the amount you collect each month. While your basic benefit amount is based on your work history and income, the age you begin claiming has an enormous impact on the size of your monthly checks.
In some cases, you can boost your benefit amount by hundreds of dollars per month simply by claiming at a different age. To receive the full benefit amount you're entitled to based on your work history, you'll need to claim at your full retirement age (FRA). If you're turning 62 years old in 2021, you have a FRA of 66 years and 10 months.
If you begin claiming before your FRA, your benefits will be permanently reduced. By waiting until after your FRA to file for Social Security, though, you'll receive a bonus amount each month in addition to your full benefit amount.
How to boost your benefits by hundreds of dollars per month
The estimated average benefit amount in 2021 will be $1,543 per month, according to the Social Security Administration. By claiming as early as possible at age 62 in 2021, your benefits would be reduced by 29.2%, leaving someone who'd be eligible to get that average amount at full retirement age with a lower amount of $1,092 per month.
However, if you were to wait until age 70 to claim, you'd receive your full benefit amount plus an extra 25.3% each month, or $1,933 per month. That's $841 more per month than if you'd claimed at age 62.
Keep in mind, too, that once you file for Social Security, your benefit amount is generally locked in for life. So if you claim early, your monthly checks won't increase once you reach your FRA. On the other side of the coin, if you delay benefits, you'll receive higher monthly payments for the rest of your life.
Is delaying benefits the right move?
Waiting a few years to claim Social Security may not be the most appealing thought, especially if you're eager to retire as soon as possible.
If you have a robust retirement fund and don't necessarily need the extra money from Social Security, there's no harm in claiming early. Or if you have reason to believe you may not live very long in retirement, you may want to claim earlier to make the most of your benefits while you can.
However, if you're worried about outliving your savings, the extra cash you'd receive by waiting can go a long way. Delaying benefits might not be easy, but it could be one of the best retirement decisions you'll ever make.