Here Are 3 Ways You Can Beat the Average Social Security Benefit
Written by
Dawn Allcot
Edited by
Evan Harris
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The average American receives just $1,835 in Social Security benefits monthly, according to the Social Security Administration (SSA). At roughly $22,020 per year, that’s only $7,440 above the poverty level for individuals in 2023.
With food, housing and gas prices all up in the past year, it’s not realistic to imagine many can retire on that amount. You’ll likely need other income and investments to live the lifestyle you want in retirement. But you can also boost your Social Security benefits beyond the national average with a few smart money moves.
Wait To Claim Your Benefits
If you wait to claim until you reach full retirement age (FRA), which is 67 for folks born in 1960 or later, you can increase your benefits by more than 30%. You’ll receive the minimum benefit if you begin collecting at 62. But for every month you wait, up until age 70, you’ll increase your earnings — up to 8% each year. Your benefits don’t increase if you delay the beginning of your claim beyond age 70.
Earn More (Up to the Wage Cap)
If you have years to go until retirement, you might be thinking about ways to boost your income for a variety of reasons. Here’s the good news: Earning more money can also increase your Social Security benefits down the line.
If you haven’t hit the wage cap of $160,200, you might want to consider a second job or a part-time gig to boost your earnings (and the amount you pay into Social Security). Keep in mind, if you work as a 1099 independent contractor, you’ll pay self-employment tax which will count toward your Social Security benefits.
To claim the maximum benefit, you’d have to max out your earnings for 35 years. But even a few years at the top salary level will boost your benefits by increasing your overall average lifetime earnings.
Work Longer
The SSA calculates your benefits based on 35 years in which you earned the most money. So if you worked 40 years, with the first few at a fast food restaurant in high school, those early paychecks would be eliminated from calculations.
If you want to increase your Social Security benefits, work a few more years at a higher salary. If you don’t have 35 years on the books — perhaps because you left the workforce mid-career to raise children and then returned — adding those years can boost your income substantially because you will remove any “zeros” from the calculations. Even if you work part-time, any earnings are better than no earnings when it comes to calculating Social Security benefits.
Social Security shouldn’t be your primary income after retirement, but it pays to try to get every dollar you can out of this program to supplement your other retirement income, such as investments and dividends. It’s a smart idea to speak to a financial advisor to see if you’re on the right track, and revisit your retirement goals and savings annually to adjust as your goals and lifestyle change.
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