Fully 69% of workers are confident that they'll have enough money in retirement, per the 2020 Retirement Confidence Survey, and that's great -- it's a solid majority. But it also means that 31% are not confident about their retirement preparedness.
The best remedies for that minority include saving and investing more, and investing more effectively -- in proven, long-term wealth builders such as index funds. Another smart move is maximizing Social Security benefits. Here are three ways to do that.
Image source: Getty Images.
No. 1: Work for at least 35 years
First off, understand how the Social Security Administration (SSA) determines the retirement benefits you'll receive. Their formula is based on an (inflation-adjusted) average of your earnings in the 35 years in which you earned the most. So you can get more in benefits by making sure you work for at least 35 years. Work only, say, 30, and the formula will be including five zeroes, which will generate a smaller monthly benefit.
No. 2: Earn as much as you can
It's also best, perhaps obviously, to earn as much as you can. Consider this possible scenario: You're content at your job and earning a wage on which you can live, and you're ignoring some opportunities to move up. You might be willing to pass up the higher income because you're doing OK now and don't want additional responsibilities. That's not smart from a Social Security standpoint, though, because higher earnings will eventually translate to higher Social Security benefits. (They can also permit greater retirement savings, which will also lead to a more financially secure retirement.)
No. 3: Delay starting to collect your benefits
Finally, consider delaying when you start collecting your Social Security benefits. You can start as early as age 62, and most people do start at 62 or 63. But starting to collect before your "full retirement age" will mean what your checks are smaller, while delaying starting to collect them beyond your full retirement age will make retirement benefits bigger. (At age 70, they stop getting bigger, so that should be the latest age at which you start collecting.)
The following table shows the percentage of your full retirement benefit you'll receive if you start collecting early or late, if your full retirement age is 66 or 67, as it is for most of us:
|
Start Collecting at: |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Data source: Social Security Administration.
There are solid reasons to start collecting benefits early, and solid reasons to delay until age 70, and each of us needs to think about when would be best given our particular circumstances. Read up on other ways to increase your Social Security benefits, too, and be sure that you're saving and investing effectively, so that you can enjoy a secure retirement.
