For most Americans, $20,118 won't be nearly enough per year to enjoy a comfortable retirement. But the average Social Security monthly benefit for retired workers in October 2022 was $1,676.53. On an annualized basis, that amounts to a little over $20,118.
You could take some steps to boost how much Social Security will pay you during your retirement years, though. Here are three no-brainer ways to beat the average Social Security benefit.
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1. Work at least 35 years
Social Security calculates your benefits based on your highest 35 years of earnings. What happens if you don't work for that long? Your benefits will be lower than they'd otherwise be. The federal program's formula will actually plug in zeros for any years you didn't work to get to the total of 35 years.
Keep in mind that working in some jobs doesn't count toward getting those 35 years. For example, some state, county, and city employees have public pensions. If you're employed for a period in one of these jobs, your earnings from working in them won't be included in the Social Security benefit calculation.
2. Maximize your earnings
You'll also want to maximize your earnings as much as possible during those 35 years. Granted, this is easier said than done. However, there are ways that you can make more money and ultimately boost your Social Security benefits.
Some jobs pay more than others do. Picking a more lucrative field to go into is one of the most important things you can do to receive a larger Social Security check down the road. But even if you aren't in one of the higher-paying lines of work, you still have options.
Do everything you can to impress your boss enough to earn a pay raise. If that doesn't pan out, consider either finding another job that pays more or picking up a second part-time job.
3. Wait to collect benefits
I've saved what's arguably the easiest way to beat the average Social Security benefit for last. It's simple: Wait to collect your Social Security retirement benefits.
Many Americans retire at 62, the earliest age at which they can claim Social Security retirement benefits. However, there's a significant penalty for taking this route. Your monthly benefits could be reduced by as much as 30%.
Social Security reduces your benefit by 0.55% for each month that you retire early before reaching full retirement age (FRA), up to 36 months. If you retire more than 36 months prior to your FRA, your benefit will be reduced by nearly 0.42% for each month of early retirement in excess of the 36 months.
Your best bet to beat the average Social Security benefit is to wait until age 70 to collect. A recent paper published by the National Bureau of Economic Research (NBER) found that more than 90% of Americans are better off waiting to receive Social Security benefits until they reach age 70. The researchers who wrote the paper also calculated that the median lifetime loss from not waiting until then topped $182,000.
More no-brainers
Social Security wasn't designed to fully cover Americans' costs during retirement. Receiving higher monthly benefits than the average $1,677 or so probably won't be enough. However, there are other no-brainer things to do to make sure you can retire comfortably.
One smart approach to ensuring you can retire without lowering your standard of living is to build up other retirement savings. For example, sock away as much money as you can in a 401(k) plan or IRA . If you start early enough, the combination of Social Security and these supplemental retirement accounts could set you up well during your golden years.
