With some things in life, you get what you get, and you have little control. Not so with Social Security. Yes, the benefits you'll receive in retirement are determined by a particular formula, but you can still do certain things to generate higher future payments.
Here are three strategies for boosting your Social Security benefits.
Image source: Getty Images.
1. Earn more
Perhaps obviously, the more you earn over your working life, the greater your Social Security benefits will be -- up to a limit. Here's some context: The average monthly retirement benefit was recently $1,563, or about $18,750 per year. The maximum benefit for 2021, meanwhile, is $3,895. To qualify for that maximum benefit, you will need to have maxed out your earnings throughout your working life -- and to have delayed starting to collect your benefits until age 70.
Few of us will be able to max out our earnings every year, but we can still aim to boost them as much as possible, and there are multiple ways to do so. You might, of course, ask for a raise every year or two -- ideally while demonstrating why you deserve one. It can help to move from company to company every few years, securing higher positions along the career ladder each time. Earning some professional certifications or additional degrees along the way can also help you qualify for higher-paying jobs. You might even consider a career change, if there's another appealing path that pays more.
You can also simply take on a side gig or two for a few years (or a lot of years), which can boost your income significantly. Simply earning an additional $100 per week will add about $5,000 to your income -- and if you find the right side gigs, you might earn much more than that.
2. Delay starting to collect benefits
Each of us can start collecting our benefits as early as age 62 and as late as age 70. For each of us, there's a full retirement age (FRA) in between, at which we can collect the full benefits to which we're entitled, based on our earnings history. (For most of us, that age is 66 or 67.) If you start collecting your benefit checks before your full retirement age, they will be smaller (though you'll collect more of them). Conversely, for each year beyond your full retirement age that you delay (up to age 70), they'll grow about 8% bigger (though you'll get fewer checks).
The table below shows how much of your full benefits you'll receive, depending on when you start collecting:
|
Start Collecting at: |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Data source: Social Security Administration.
Not everyone can afford to delay -- some will simply need that retirement income as soon as they can get it, perhaps due to an unexpected job loss or health setback. But if you can delay, it will boost the size of your benefit checks.
3. Coordinate with your spouse
Finally, if you're married, coordinating with your spouse can deliver bigger benefits, too.
Imagine this scenario: You're married, and your spouse has generally earned much more than you. You both start collecting benefits as soon as you can, at age 62. You collect, say, $1,800 per month, and your spouse collects, say, $2,300. If your spouse dies first, your household can no longer collect both checks -- instead, you get the greater of the two, so your benefit rises to $2,300.
But if your spouse had been able to delay starting to collect until age 70, that $2,300 check could have grown by 24% -- into a $2,850 one. Strategizing with a spouse can be a powerful income-maximizing move.
It's well worth taking a little time to learn more about Social Security, because it's likely to provide a meaningful chunk of your retirement income, and it's worth getting as much out of the program as you can.
