The average Social Security payment in the U.S. hovers around $2,000, although the amount you'll receive depends largely on your work history and how much you've earned in benefits, according to the Social Security Administration (SSA) benefit formula.
If $2,000 a month doesn't quite cut it for you, there are steps you can take to raise your benefits. If you're still working, maximizing your benefits involves one of the three most common approaches.
Image source: Getty Images.
1. Create 35 years of work history
The SSA uses your earnings history to figure out your benefit amount at full retirement age (FRA). FRA is important because that's the point at which you receive 100% of the benefits you've earned. While anyone who has been employed for at least 10 years is eligible for Social Security retirement benefits, working longer can maximize those benefits.
The SSA bases your benefits on the 35 years in which you earned the most income. Next to each of those 35 years, there's a space for how much you earned that year. If you work for fewer than 35 years, there's a zero next to each year between 10 and 35 that you didn't work.
If your work history includes starting and stopping, that's OK. You don't have to work 35 years in a row. However, for your maximum Social Security payout, you need 35 years of employment over the course of your life.
2. Work until your FRA
Working until your full retirement age, which is around 67 for most working Americans, means receiving 100% of your Social Security benefits. If you decide to claim benefits at 62 instead, your monthly benefit is reduced by 30%. For example, if you were due to receive $2,000 per month at 67, that amount would be permanently reduced to $1,400. Over the course of five years, the reduction will cost you $36,000.
In addition, if you're married and your spouse intends to collect spousal benefits, they're eligible for up to 50% of the amount you'll receive at FRA. In other words, if you receive $2,000 monthly, they'll receive $1,000.
By claiming benefits early, you not only permanently reduce your benefits, but you also permanently reduce your spouse's benefits by up to 35% per month (depending on the year you were born).
3. Retire when you're 70
If you remain healthy and enjoy your job (or take a job you believe you'll enjoy), waiting until you're 70 to claim Social Security benefits can boost your checks by 24%. That's because delaying your claim increases your payments by 8% per year you work past FRA. Delaying until 70 means a $2,000 monthly benefits payment would increase to $2,480.
For most Americans, Social Security represents an important part of their post-retirement income. If that's likely to be the case for you, it can pay to find a way to ensure your benefits are as large as possible.
