According to a 2022 survey by the folks at Bankrate.com, fully 55% of working Americans reported being behind on saving for retirement -- and that's up from 51% saying so in 2021. Yikes.
Most of us need to have a good retirement plan in place, and we need to be executing it diligently so that we end up with a big enough nest egg for a comfortable retirement. Another smart move to build a solid retirement is to maximize your Social Security benefits. (For context, know that the average monthly retirement benefit was just $1,831 as of February 2023.)
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Here are some ways you might boost your monthly Social Security payout.
1. Earn more
This strategy may be obvious, but not everyone really considers it. You may, for example, be relatively content at your current job, looking forward to an annual salary bump of perhaps 3%. But you may be able to snag a much bigger income increase by asking for a raise, applying for higher-paying positions at your current employer, or applying for better-paying jobs elsewhere. The more you earn, the bigger your future Social Security benefit checks will be.
You might even consider switching careers if there's an alternative (and more lucrative) one that interests you. Or take on a side gig for a few or many years. If you can bring in an extra $200 per week, that's more than $10,000 over the course of a year, and it could be a powerful annual addition to your retirement investing.
Note that there's an earnings cap in the Social Security world -- officially referred to as the "Contribution and Benefit Base" -- above which you're not taxed for Social Security, and above which you don't increase your future benefits. It tends to go up each year, and for 2023, it's $160,200. So if you're a high earner, boosting your income from, say, $200,000 to $225,000 won't do much for your Social Security benefits. For most of us, though, there's plenty of room for benefit improvement.
2. Work at least 35 years
Next, be sure you work and earn income for at least 35 years -- because the formula used to determine your benefits is based on your earnings in the 35 years in which you earned the most. (These figures are adjusted for inflation, of course.) So if you only work for, say, 30 years, there will be five zeros factored into the calculations, resulting in a punier payout.
3. Work more than 35 years
Some people may be able to boost their benefits significantly by working more than 35 years. Here's how: If you're now earning a lot more than you did in the past (on an inflation-adjusted basis), once you pass 35 years of work, each additional high-earning year will kick your lowest-earning year out of the calculation. That will result in a fatter benefit check.
4. Claim your benefits at the right time
You may know that you can start collecting your benefits as early as age 62, but you might not realize that it's only at your full retirement age that you'll get to collect your full benefits. Start collecting early, and your checks will shrink -- though you'll end up with more of them. Delay starting to collect your benefits, and for each year beyond your full retirement age that you delay (up to age 70), your benefits will increase by about 8%.
Delaying isn't right for everyone, but it can be a powerful move. So carefully think through the decision of when to start collecting your benefits.
5. Collect cost-of-living adjustments
Finally, know that no matter what you do or don't do to boost your Social Security benefits, they will increase on their own over time automatically, with no effort needed from you, via cost-of-living adjustments (COLAs). These help retirees keep up with inflation.
In general, COLAs tend to be relatively modest -- typically between 0% and 4% or 5%. We're currently living in a period with higher-than-usual inflation, so recent increases have been on the steep side: 5.9% in 2021 and 8.7% in 2022.
It's worth taking some time to learn about Social Security -- and to keep up with developments regarding it -- so that you'll be well positioned to make smart Social Security decisions that help you get as much as possible from the program.
