The average baby boomer today has $120,300 saved for retirement, reports Northwestern Mutual, while the average member of Gen X has a nest egg worth $108,600. Unfortunately, these aren't particularly large sums of money. And people with similar levels of savings may end up heavily reliant on Social Security once their time in the workforce comes to an end.
If you're approaching retirement with savings that aren't particularly robust, then you may be eager to get as much money as you can out of Social Security. And with these fairly simple moves, you could end up with a boosted monthly benefit.
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1. Work at least 35 years
Social Security pays each worker a monthly benefit based on their individual wage history. Specifically, your 35 highest-paid years in the labor force are accounted for in that calculation.
But if you don't have a 35-year work history, Social Security will factor in a $0 for each year you're missing an income. So if you're nearing retirement and know you've only worked for, say, 32 years, putting in an extra three years could do your finances a lot of good. Not only might a few extra years of work allow you to add to your savings, but it could make it so you're eligible for more Social Security once you claim benefits.
2. Check your earnings statements for accuracy
Each year, the Social Security Administration (SSA) issues workers an earnings statement. That document will contain a couple of pivotal pieces of information -- a summary of your wages from the year associated with that statement, and an estimate of your future monthly benefit.
It's important to check that document for accuracy, because if your earnings are underreported, it could result in less Social Security. On the flipside, correcting a mistake could lead to a higher monthly payday.
If you're 60 or older, you can sit back and wait for your earnings statement to arrive in the mail every year. If you're younger, just create an account on the SSA's website to access that information.
3. Delay your claim until you turn 70
Once you reach full retirement age (FRA), you'll be entitled to your complete monthly Social Security benefit based on your 35 highest-paid years in the workforce. FRA is either 66, 67, or somewhere in the middle, based on your year of birth.
However, you can accrue delayed retirement credits for postponing your Social Security claim past FRA. And while those credits stop accumulating at age 70, you can potentially raise your monthly benefit by 24% or more by filing at that time.
Of course, in many cases, claiming Social Security at 70 means working until age 70. But that doesn't mean you have to stay at your current full-time job. You may be able to pivot to a more rewarding and less stressful role that pays the bills for a few years until your 70th birthday arrives.
Even if you have a decent amount of savings going into retirement, remember that mismanaging that money could put you at risk of running out at some point in time. Social Security, on the other hand, is set up to pay you your monthly benefit for the rest of your life. Because of this, it's a good idea to do what you can to lock in the highest monthly benefit possible. And these fairly simple moves could be your ticket to a lot more financial stability throughout your senior years.
