For retired workers, the average monthly Social Security benefit is $1,670.95 -- or about $20,000 a year. That number does not include benefits for spouses and children of retired workers, who typically get a fraction of the breadwinners' income.
Three main factors that affect your Social Security benefit are your claiming age, your working income, and how long you've worked. Beat the averages in two or more of those areas, and you're on your way to earning more than the $1,671 average from Social Security at retirement.
Read on for three strategies that can help you make it happen.
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1. Wait to collect Social Security
According to an analysis from Boston College's Center for Retirement Research, some 34% of women and 31% of men who claimed Social Security in 2019 were 62 years old. This is the earliest age you can begin collecting Social Security.
The trouble is that filing for Social Security at age 62 lowers your benefit by up to 30%. If you're focused on higher Social Security income, waiting to apply is the most straightforward strategy. Each month you delay your Social Security application, your benefit rises.
Once you reach your full retirement age (FRA), your benefit is equal to your "primary insurance amount." This is your benefit, as calculated by the Social Security formula, without early claim deductions or delayed retirement credits (more on this below). Your FRA is between 66 and 67 years old, depending on what year you were born.
Postpone claiming benefits beyond your FRA, and you'll earn delayed retirement credits. These raise your benefit by 8% annually until you turn 70.
Note that holding out for a higher benefit isn't always the right choice, because you must forgo income upfront. Consider doing a break-even analysis to determine when the higher benefit makes up for the foregone income.
2. Earn more
You can also push your retirement benefit above the average by earning a high salary. The average salary for workers aged 55 and older is $57,980. Make it your goal to bring home more than that in the years leading up to retirement.
You might apply for a promotion, ask your boss for a raise, or get a second job. You could even start a side hustle to boost your income. The key here is to report your side hustle earnings and pay your self-employment taxes. That way, Social Security will include the income in your official work record.
3. Work 35 years or more
Social Security calculates your benefit by averaging your inflation-adjusted income from your 35 highest-paid years. If you've only worked, say, 30 years, Social Security includes the missing five years with zero income in the average calculation.
Those zero-income years reduce your average and, in turn, your benefit. As a simple example, say you earned an inflation-adjusted salary of $55,000 every year of your career. With 30 years on your work record, your average income using Social Security's formula is about $47,000. Work the full 35 years, and your average moves up to $55,000 -- in line with your actual income at retirement.
If possible, put in the full 35 years of work. There's an income boost waiting on the other side.
Beating the average in retirement
Beating the average Social Security benefit is a realistic goal when you know which levers to pull. Wait until FRA (or longer if it makes sense) to claim Social Security, earn a higher-than-average annual income, and complete 35 years of tax-paying work.
Your efforts could be a valuable step toward generating the above-average retirement benefit you deserve.
