Social Security benefits can be a lifeline in retirement, especially if your savings are falling short.
Although Social Security is only designed to replace around 40% of your income, around 37% of men and 42% of women depend on their benefits for at least half of their income in retirement, according to the Social Security Administration.
Exactly how much you'll receive in benefits depends on several factors, but the average retiree will collect around $1,657 per month in 2022, up from $1,565 per month in 2021. Are you on track to beat that average? Here are three ways to tell.
1. You plan to work longer than 35 years
The number of years you work before claiming benefits will affect your primary insurance amount (PIA), which is the amount you'll receive if you claim benefits at your full retirement age (FRA).
To calculate your PIA, the Social Security Administration takes an average of your wages over the 35 highest-earning years of your career, then runs it through a series of calculations to adjust it for inflation. If you haven't worked a full 35 years before you file for benefits, you'll have zeros added to your average and will receive a lower benefit amount.
To earn a higher-than-average benefit amount, it's important to work at least 35 full years. The longer you work, the more you'll potentially receive from Social Security.
2. You're earning an above-average salary
Your income will also have a significant impact on your future benefit amount. In 2022, the maximum taxable earnings limit will be $147,000 per year. This is the highest income that's subject to Social Security taxes, so the more you're earning up to this limit, the more you'll receive in benefits.
The median income among American workers is just over $52,000 per year, according to data from the U.S. Bureau of Labor Statistics. If you're earning a higher-than-average income (up to the maximum taxable earnings limit), there's a better chance you'll earn a higher-than-average benefit amount, too.
3. You expect to delay claiming benefits
Finally, the age you file for Social Security will affect how much you'll receive each month. If you're eager to collect as much as possible in benefits, waiting a few years to claim is one of the easiest and most effective ways to increase the size of your checks.
If you file for benefits at your FRA -- which is between ages 66 and 67 depending on the year you were born -- you'll receive the full benefit amount you're entitled to. If you claim before your FRA (as early as age 62), your checks will be reduced by up to 30%. By delaying benefits until age 70, you'll receive your full benefit amount plus up to 32% more every month.
Waiting until age 70 to claim benefits isn't the right move for everyone, and sometimes it pays to claim early. However, if your primary goal is to collect the highest benefit amount possible, delaying benefits can be a smart strategy.
Social Security benefits may make up a substantial portion of your income in retirement. By understanding these three factors that affect the size of your monthly checks, you'll have a better shot at beating the average benefit amount.