Social Security is probably more vital and powerful than you think. For one thing, it keeps more than 15 million people out of poverty and provides 50% or more of retirement income for more than a third of older beneficiaries.
It's best, then, to aim for the fattest Social Security checks you can, to boost your financial security in retirement. For context, know that the average monthly retirement benefit check was recently $1,665 -- or about $20,000 annually. How might you do better than that? Here are three effective strategies.
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1. Up your earnings
First up, aim to earn as much as you can -- because the more you earn over your working life, the bigger those Social Security checks will be -- up to a point. Every year, there's a cap beyond which earning more won't boost your benefits, and for 2022, it's $147,000. So if you're already earning, say, $150,000, you can relax. Most of us aren't, though, and can benefit from beefing up our earnings.
That's easier said than done, of course, but there are a few strategies you might try:
- Ask for a raise at work. You might actually ask for a raise every few years, and for best results, deserve a raise. Some studies suggest that as many as 70% of those who ask for an income boost get one. (Other studies show women asking for raises less frequently and getting them less frequently than men -- but still, you do have to ask.)
- Take on a side gig for a few years or possibly many years. A job on the side can bring in valuable extra income. Just earning, say, $20 per hour for 10 hours per week amounts to more than $10,000, pre-tax, over the course of a year.
- Change jobs -- or even careers. Many of us may like to stay put in a comfortable workplace, but you may be able to secure a higher income by changing jobs. You might even switch into a higher-paying career.
2. Work longer
Next, work longer. The formula used to determine your ultimate Social Security benefits takes your earnings, adjusted for inflation, from the 35 years in which you earned the most. So it's important to shoot for at least 35 years of work -- otherwise some zeroes will be factored into the calculation.
Once you have 35 years, though, if you're earning more on an inflation-adjusted basis than in years past, you might work a few more years -- because every new high-earning year will kick your lowest-earning year out of the calculation, boosting your benefits.
3. Delay, delay, delay
Finally, consider delaying starting to collect your benefits. You can start as early as age 62 -- and many people do start then or soon after. But you can delay starting to collect up to age 70, and get bigger checks for doing so. Each of us has a "full retirement age" (which is 66, 67, or somewhere in between for most of us), and for every year beyond it that you delay, your benefits will grow by about 8%. That can turn a $2,000 monthly benefit into a $2,480 one if you delay from age 67 to 70.
Put some thought into when you start to collect your benefits, because starting early does make sense for some people -- and remember, if you start early, your checks may be smaller, but you'll get more of them. If you simply need that income, or you're likely to live a shorter-than-average life, starting early can be smart. If you can delay, though, and you stand a decent chance of living a longer-than-average life, try to delay.
Those are three effective ways to increase your Social Security benefits and get more out of the program. There are others, of course, such as strategizing and coordinating with your spouse, if you're married. Learn a little more about Social Security, and your retirement may end up a bit more secure.
