Even if you manage to build yourself a nice nest egg for retirement, there's a good chance you'll end up depending on Social Security to a pretty large degree once your time in the labor force comes to an end. And so it's best to do what you can to snag the highest monthly benefit you're eligible for.
One way to get more money out of Social Security is to claim benefits strategically. Filing for Social Security at age 70, for example, could leave you with a much higher monthly benefit than signing up at an earlier age.
But there's a step you can take today to carve out a higher Social Security benefit for life. And it's a move that might also help your near-term financial picture improve tremendously.
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Dive into the gig economy
A Zapier report released in June 2022 showed that 40% of Americans were holding down a side hustle. And if you're eager to set yourself up with a higher monthly Social Security benefit for life, you may want to jump on that bandwagon.
The Social Security benefit you're entitled to in retirement will hinge on your wage history. But it's not just wages from a salaried job that go into calculating your future monthly benefit.
Whether you get a side hustle that withholds taxes from your wages or not, that income counts toward your Social Security benefits down the line as long as the IRS knows about it. And to be clear, you have to report your income to the IRS even if you're paid on a freelance basis.
So, let's say you pick up a side hustle this year that earns you an extra $5,000. That $5,000 will count toward your 2023 wages when calculating your Social Security benefits.
A smart move all around
These days, a lot of people are having a harder time paying their bills due to inflation. Many are even cutting back on retirement savings and other goals to compensate for higher living costs.
If you get yourself a side hustle, you can not only set yourself up for more money from Social Security, but also, better your financial situation in the near term. The extra money you earn might let you pay your bills without risking credit card debt. And it might also allow you to keep funding your IRA or 401(k) plan, as opposed to having to pause your contributions. So if you're willing to put in the time and make the effort, a side hustle could really work wonders for you in the near term as well as in the future.
Plus, there's been talk of a potential recession striking the economy in the not-so-distant future. Having a second source of income could be instrumental at a time like that. So even if you're not the type of person to go out and do the trendy thing, it's worth being a part of the gig economy for the numerous financial benefits involved.
