Psst! Guess what? You may be just assuming that your Social Security checks will be whatever they will be and that you can't control how big they are. If so, you're wrong. There are plenty of ways you can beef up those benefits -- especially if retirement is not around the corner.
For example, you might check out the record of your earnings that the Social Security Administration has -- once you set up a "my Social Security" account. That data is used to calculate your benefits, so make sure it's correct. Here are three other effective ways to bolster those benefits.
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1. Work at least 35 years
The formula that Social Security uses to determine how much money to send you every month in your retirement factors in your earnings from the 35 years in which you earned the most (with every year's income adjusted for inflation). So if you only work, say, 28 years before retiring, there will be seven zeroes factored into the equation, and that will result in a benefit amount much smaller than it could have been.
2. Work for more than 35 years
Also, obviously, the more you earn during your working life, the bigger your benefits will be, to a certain degree. Let's say that you did work for those 35 years, and you're thinking of calling it quits now, as you approach age 62, the earliest age at which you can claim your benefits. Well, if your first few years featured a lot of part-time work, or your earnings were low back then, those low numbers will hurt your benefit check. It's the same if you earned reasonable, fairly average incomes in your first bunch of working years, but you're now earning much more than you ever did, even on an inflation-adjusted basis.
In those cases, you may be able to increase your future benefits significantly by working for a few more years. For every additional year you work, your lowest-earning year's income will be kicked out of the calculation. Remember -- it's only your 35 highest-earning years that count.
You might even get very proactive about it and work aggressively to increase your income for a few years -- perhaps by taking on a side gig, getting a higher-paying position, or switching into a more lucrative profession.
3. Delay starting to collect your benefits
Finally, another powerful benefit boosting strategy is this: Delay when you start collecting the benefits. Each of us has a "full retirement age" at which we can start collecting the full benefits to which we're entitled. For most of us, it's 66, 67, or somewhere in between. But we can start collecting Social Security retirement benefits as early as age 62. The catch is that they'll be smaller than if we started collecting later, but we'll collect many more checks this way.
We might also delay starting to collect our benefits. For every year that we do so beyond our full retirement age and up to age 70, our benefits will grow by about 8%. So waiting from age 67 to 70 can make our checks 24% bigger. Note, though, that if we delay, we'll end up collecting fewer checks. The system is actually designed so that it doesn't matter when we start collecting if we live an average-length life.
Still, there are plenty of good reasons to delay, if we can. For starters, if we are in good health and stand a decent chance of living a longer-than-average life, then we'll come out ahead. Also, if we're married and we're the higher earner in the family, then it can be smart to maximize our benefits because when one spouse dies, the other gets to collect either benefit, whichever is larger -- and that can really help out the lower-earning spouse.
The last consideration is inflation -- and the cost-of-living adjustments (COLAs) that Social Security recipients receive in most years. The bigger your benefit, the bigger your annual increase will be.
It can pay to read up on Social Security and make some smart moves, both now and later. You may end up with a more financially secure future if you do.
