You may not know this, but the maximum monthly Social Security benefit for retirees retiring this year is $4,194. That's not too shabby, right? It's about $50,000 annually (and, of course, subject to regular cost-of-living adjustments).
But that's the maximum, and it's hard to achieve. The average monthly benefit is more like $1,674 -- or about $20,000 per year. That's probably going to look quite insufficient to you, which is why you might need to be saving and investing for your retirement on your own, to supplement that.
There's a silver lining to that bad news, though: There are things you can do to increase your ultimate Social Security benefits. Here are three of them.
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1. Earn more than average
This might be obvious: To get bigger-than-average benefits, you'll need to have earned greater-than-average wages. This is certainly easier said than done, of course, but there probably are some ways that you can beef up your earned income.
For one thing, ask for a raise. And do it at least every few years. Such requests result in raises more often than you'd think.
Another strategy is to look for a better-paying job elsewhere. Some studies have suggested that those who jump from job to job every few years tend to earn more than those who just stay with the same company for many years.
Consider making yourself eligible for higher-paying jobs, too. This might entail switching to an entirely new career, or simply earning a new degree or professional designation.
Finally, you can also do well by taking on a job or two on the side. This doesn't have to be as terrible as it sounds. You may be able to make more money doing things you enjoy, such as giving music or language lessons, making crafts and selling them, or just driving around for a ride-sharing service.
2. Delay starting to collect your benefits
Next, consider delaying starting to collect your Social Security benefits. You can start anywhere from age 62 to 70, but you'll get the full benefits to which you're entitled, based on your earnings record, if you retire at your "full retirement age," which is likely 66, 67, or somewhere in between.
Starting early will result in smaller checks -- though you'll receive many more of them. Delaying will result in bigger ones -- bigger by about 8% for every year you delay from your full retirement age to age 70. (So delaying from age 67 to 70 can make your checks 24% bigger.) Delaying isn't the right move for everyone, and some people simply need that income as soon as possible, but see if it makes sense for you to delay.
3. Save and invest on the side
Finally, remember that another way to beat that $1,674 check is to supplement it with income you've set up for yourself via many years of saving and investing. Doing so can get you a hefty nest egg that you can shave dollars off every year.
If you're invested in lots of dividend-paying stocks, you may not even need to shave off that much, as they will be generating cash regularly. A $400,000 portfolio with an overall dividend yield of, say, 4% will kick out about $16,000 annually -- roughly $1,333 per month.
As you approach retirement, you might also consider buying a fixed annuity. You'll have to hand over a big chunk of change to a financial services company, but you'll be promised regular income -- for the rest of your life, and your spouse's life, too, if that's the kind of annuity you buy.
So don't let the paltry average Social Security benefit discourage you. There are multiple ways to end up with far more income in retirement.
