Social Security is an integral source of income for millions of retirees. Around 37% of men and 42% of women rely on their benefits for at least half of their retirement income, according to the Social Security Administration.
However, as of April 2023, the average retired worker receives around $1,835 per month in benefits -- or just over $22,000 per year. That's hardly enough for most retirees to live on, especially as costs continue to surge.
The good news, though, is that your benefit amount isn't set in stone. If your goal is to beat the average benefit, there are three strategies that can get you there.
Image source: Getty Images.
1. Work a little longer
The Social Security Administration calculates your benefit amount by taking an average of your wages over the 35 highest-earning years of your career. That number is then run through a complex formula to adjust it for inflation, and the result is your basic benefit amount.
If you begin claiming before you've worked a full 35 years, it will result in a lower benefit. But even if you've already worked 35 years, choosing to work a little longer can increase your payments.
Chances are you're earning a more substantial income now than you were at the start of your career. The more years you work while earning higher wages, the higher your earnings average will be -- which also means a larger benefit amount.
2. Boost your income
Increasing your income -- even slightly -- will also result in larger payments each month.
There is a limit, though, to how much your income affects your benefit. This limit changes each year to account for inflation, but as of 2023, it's $160,200 per year. The more you earn up to this limit, the higher your benefit amount will be. Once you pass this limit, though, it won't affect the size of your payments.
The highest possible benefit amount in 2023 is $4,555 per month. To earn this amount, you'll need to be consistently reaching the earnings limit throughout your career. But even if you're earning nowhere near this limit, getting as close as you can will still increase your benefits.
3. Delay claiming benefits
Perhaps the simplest and most effective way to boost your monthly payments is to delay filing for Social Security.
You can begin claiming benefits at 62 years old or any age thereafter. But the earlier you file, the smaller each payment will be.
Your basic benefit amount -- or the amount you'll receive based on your work history -- is how much you'll collect by filing at your full retirement age (FRA). For everyone born in 1960 or later, your FRA is 67 years old.
If you were to file at age 62, your benefits would be permanently reduced by up to 30%. But if you delay claiming until age 70, you'll receive your basic benefit amount plus a bonus of at least 24% per month.
Larger checks are within reach
You don't necessarily need to make all three of these moves to increase your payments, and small steps can add up.
For example, you may not be able to delay Social Security until age 70, but if you wait even a year or two, it can still boost your payments by hundreds of dollars per month. Or maybe you can't reach the $160,200 per year earnings limit, but you can increase your income by a couple of thousand dollars per year. That, too, can help.
If you're expecting to depend on Social Security to any degree in retirement, it can be smart to take steps to maximize your benefits. With the right strategy, you could collect more than you might think.
