The average monthly Social Security benefit for retired workers, according to the most recent data, was $1,662.79. However, the checks that seniors receive vary greatly.
The current maximum monthly Social Security benefit is $4,194, which is more than $2,500 higher than the average benefit. Here are three steps you can take to increase your payments.
1. Confirm that you have at least 35 years of earnings.
The average earnings of your 35 highest-paid years will be used to calculate your Social Security benefit. That means you’ll need at least 35 years of income to factor into the calculation. Working for an additional year may benefit you if you’ve earned a higher salary. You can significantly increase your benefit by adding more years of high income and dropping years of low income from the Social Security income calculation.
2. Increase your earnings
Making more money is easier said than done, but it will have a significant impact on the retirement benefit you receive. This means that taking on a part-time job or thinking about a career change that will provide more income could be a way to increase your monthly pay.
The maximum taxable amount of Social Security income in 2022 is $147,000, and having equivalent earnings over 35 years of work will help you increase your Social Security distribution. That is, earning at least $147,000 in inflation-adjusted terms over a 35-year period is the first step toward qualifying for the maximum monthly benefit of $4,194.
3. Delay filing for Social Security benefits for a longer period of time.
At the age of 62, people become eligible for payments. Meanwhile, the Social Security Administration (SSA) considers full retirement age (FRA) to be between 66 and 67, depending on when you were born, and you’ll have to weigh the pros and cons of when to begin receiving benefits based on your specific circumstances.
Taking Social Security at the age of 62 reduces your monthly distribution by 30% compared to the amount you would have received if you had waited until FRA. If you have earned the maximum taxable amount over a 35-year period and begin receiving Social Security payments at the age of 62, your monthly benefit will be $2,364.
However, in order to receive the maximum monthly Social Security benefit of $4,194, you must be 66 years old and wait until 70 to claim benefits. Up to the age of 70, each month you delay taking benefits increases the monthly distribution you receive by 8% on an annual basis.
What if you don’t get the full benefit?
Don’t be disheartened if it appears that you aren’t on track to reap the full benefits. According to the SSA, only 6% of workers in 2020 met the maximum taxable earnings threshold. And you may have compelling reasons to accept payments on or before FRA.
Because it is uncommon for an individual to qualify for the maximum monthly Social Security benefit, you should focus on increasing your benefit rather than worrying about falling short of the maximum distribution, and make decisions about other aspects of the programme with your unique situation in mind. With the understanding that the majority of people will not qualify for the maximum benefit, it is a good idea to have other retirement strategies in place rather than relying entirely on Social Security to fund your lifestyle in your later years.
If you’re like the majority of Americans, you’re a few years (or more) behind on retirement savings. However, a few little-known “Social Security secrets” could help you increase your retirement income. For example, one simple trick could earn you up to $18,984 more per year! We believe that if you learn how to maximise your Social Security benefits, you will be able to retire confidently and with the peace of mind that we all seek.