Millions of retired seniors collect a monthly benefit from Social Security that's instrumental in helping them cover their bills. And one day, whether it's sooner or later, you might end up in a similar position of needing Social Security to pay your essential expenses.
That's why it's so important to do what you can to lock in as generous a monthly benefit as possible. And these three moves could help ensure that you don't wind up unhappy with the sum of money Social Security pays you each month.
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1. Boost your wages
A higher paycheck in the near term could work wonders for your stress level and quality of life. It could set you up with a larger Social Security benefit down the line.
That's why it pays to work on building and developing skills that set you up for higher pay. If you're able to climb the ladder steadily, the higher wages you bring in now could result in more Social Security later.
But it's not just salaried wages that count toward Social Security. If you're interested in picking up freelance work in the gig economy, those earnings, too, could add to your wage base and result in larger Social Security checks in retirement. So don't just think of a side hustle as extra spending money -- think of it as a way to lock in a higher Social Security paycheck for when you're older.
2. Make sure to work for at least 35 years
The monthly Social Security benefit you're eligible for in retirement will be calculated based on your 35 highest-paid years in the workforce. But if you don't have a 35-year work history, you'll have a $0 factored into your individual benefits calculation for each year you're missing an income within that top 35.
That's why it's so important to aim for 35 years of work. If you're nearing retirement with only 32 years of wages under your belt, aim to continue working at least part-time. It's better to replace some years of $0 wages with a part-time wage if a full-time wage isn't attainable.
3. Avoid filing for benefits early
The monthly Social Security benefit you're entitled to based on your income history is yours to collect without a reduction at full retirement age (FRA). FRA is either 66, 67, or somewhere in the middle, depending on the year you were born.
However, Social Security allows seniors to sign up for benefits as early as age 62. And many older Americans take advantage of this option to get their money sooner.
If you want to avoid a reduction in benefits, however, find out your FRA and make sure to hold off on claiming Social Security until that age arrives. In fact, you may even want to delay your Social Security filing past FRA. For each year you do, up until age 70, your monthly benefits get an 8% boost -- and a permanent one at that.
There's a good chance that Social Security will play an important financial role in your retirement. So it's important to do what you can to lock in a benefit that's large enough to meet your needs and cover your expenses. And if you make these three moves, you can potentially set yourself up with a nice income stream for retirement -- one that enables you to enjoy your senior years to the fullest.
