This might surprise you: The average monthly Social Security retirement benefit was recently $1,671. That's just $20,000 per year, roughly. Clearly, it's not going to be enough to support most of us very comfortably, unless we've amassed a sufficient war chest on the side. (Most of us need to be saving and investing effectively throughout our working lives, in order to be able to retire comfortably. And a simple, inexpensive index fund can be all you need.)
Still, there's a good chance you can collect more than $20,000 from Social Security each year. For one thing, that's an average -- so if your earnings history has been above average, you'll collect more than that. That sum is also increased periodically, to keep up with inflation (to some degree). And most importantly, there are ways to increase your Social Security benefits. Here are three you should consider.
Image source: Getty Images.
1. Delay, delay, delay
If you can put off starting to collect your benefits, you'll make them bigger. Each of us has a "full retirement age" at which we can start collecting the full benefits to which we're entitled, based on our earnings. It's 66 or 67 or somewhere in between. You can start collecting benefits as early as age 62, but the checks will be smaller (though you'll receive many more of them).
And you can make your checks bigger by delaying starting to collect them beyond your full retirement age. They'll plump up by about 8% for each year, until age 70.
The table below shows the percentage of your full benefits you can expect to collect, depending on when you start collecting them. Remember that starting early means more checks, and delaying will result in fewer checks. For those who live average-length lives, the total collected won't vary too much no matter when you start collecting.
|
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.
2. Earn more, collect more
Another benefit-boosting strategy may be obvious, but some people don't think of it: Earn more. Remember that your benefits are not just based on your age -- they're based on how much you earned in the 35 years in which you earned the most (and the calculations adjust each year's earnings for inflation).
The more you earn, the fatter your checks will be -- though they'll never surpass a certain cap, which is currently $4,194. Here are a few ways to beef up your earnings:
- Be aggressive about pursuing promotions and raises at work. Work hard to deserve promotions, and ask for raises regularly. Many people never ask, and many people who ask are surprised when their bosses say yes.
- Consider adding a degree or professional certificate or designation to your resume, to qualify you for higher-paying jobs.
- Look for jobs at other companies, as job-hopping every few years can be a good way to climb career ladders and get occasional big bumps in pay.
- Take on a side gig or two, to bring in more money. There are myriad possibilities, such as driving for a ride-sharing service, renting out space in your home (or your whole home), giving music, voice, or language lessons, tutoring kids, making and selling crafts, and so on.
If you're earning a lot relative to your past earnings as you approach retirement, consider working a few more years, as the more high-earning years you have, the better.
Also, once you've worked those 35 years, if you're earning more than you've earned before, on average (and adjusted for inflation), consider working a few more years -- because each high-earning year will kick a low-earning year out of the calculation, resulting in bigger benefits.
3. 'Honey, let's talk'
Finally, if you're married, coordinate your Social Security strategy with your spouse. It can be effective, for example, for the higher earner between you to delay starting to collect as long as possible, to maximize that payout. That's because when one of you passes away, the survivor will get to receive whichever benefit is bigger, and it's a way to protect the lower earner.
As you develop your overall retirement plan, be sure to give some thought to Social Security, as it can make a big difference in your future financial stability.
