Nobody's ever going to refuse a monthly check for $1,827. But let's face it: That's not a ton of money. That is the value of the average monthly Social Security payment currently being made to retirees, however, which means plenty of people in their golden years may be worried about their current financial situations.
The good news for those yet to retire is there are some things you can do now to do better than this average later. While Social Security was never intended to be the bulk of anyone's retirement income, here are three strategies to consider if you're looking to beef up your benefits once you're done working.
Get a side gig
The size of your Social Security payments is directly linked to the amount of taxable income you earn while you're working. The more you put in, the more you take out. Presumably, however, you're already earning as much as you feasibly can from your conventional 9-to-5 job.
But did you know that part-time work and even side-gig income like driving for Uber also generates taxable income that Social Security considers when calculating your eventual monthly benefit? It's easier said than done, to be sure. Most of us are already overwhelmingly busy.
Finding the time and energy to do even more seems like an impossible task. To this end, you might want to make a point of looking for side jobs that allow you to work when and as little as you want (like driving) rather than taking a job that an employer schedules. You might earn more extra money doing your own thing anyway.
Whatever the case, it may well be worth it. For perspective, for every $10,000 more you earn per year, your monthly benefit roughly improves on the order of $300 -- more so for younger people, although less so for older workers. That's not bad. A side gig also opens the door to several types of self-employment retirement accounts that aren't otherwise available to you.
Wait longer to retire
It's not what most people want to hear. It's true all the same, though. The longer you wait to claim benefits, the bigger they are once they begin.
Some specific numbers help to illustrate this fact. Let's use the broad average monthly payment of $1,827 as a reference point, assuming that average recipient has reached the new full retirement age of 67 (for people born in or after 1960). If that individual can wait until they are 70 years old to claim benefits, they'll see monthly payments that are around 20% to 25% bigger. Conversely, had that 67-year-old retired three years earlier, these monthly checks would be roughly 20% to 25% less in most instances.
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This might make the decision easier. Back in 1960, the average life expectancy in the United States was right at 70 years of age, according to data from the Centers for Disease Control. Now it's a little over 79. You'll still have plenty of time to enjoy your golden years even if you hold off a while on calling it quits.
Correctly claim spousal and/or survivor's benefits
The Social Security Administration is more accommodating to married couples' unique situations than most people might realize. For example, did you know that even if you don't personally qualify to collect any Social Security benefits due to your own lack of lifetime earnings, you can still collect payments based on your spouse's work history?
And if you have worked enough to secure eligibility for benefits, depending on the situation, your spouse's benefits could potentially be added to your own payments. Similar rules apply to the spouses of deceased individuals who were already collecting monthly benefits, or would have eventually been able to do so.
Navigating spousal and survivor's benefits can be complicated, so much so that many couples, widows, and widowers never bother making a plan that will optimize their future payouts. Social Security Administration employees can explain different hypothetical scenarios for your particular situation, but they're not allowed to offer advice.
In some cases your decisions are even irreversible. For this reason, it might be best to find a financial advisor that specializes in such matters. It's the kind of professional help that often pays for itself, however. Depending on your situation, it could translate into thousands of dollars' worth of additional payments every year.
Social Security should be just one part of a bigger plan
Again, there's no good reason not to make the most of your Social Security benefits, even if you know you'll never qualify for more than the current average monthly check of $1,827.
Regardless of how you maximize your future Social Security payments, bear in mind there are other, better ways to build a nest egg for yourself. An individual retirement account is the best place to start saving, and if you start saving enough soon enough, you'll collect bigger retirement checks from this account then you ever will from Social Security. The key is just getting started, no matter how modest that start may be.
