Social Security Pays Nearly $5K a Month to the Rich: 4 Ways To Increase Your Future Benefit
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Brooke Barley
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Amber Barkley
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If you’re a Social Security recipient, you will see some benefit increases in 2024. Social Security benefits are set to go up 3.2% this year, bringing the average benefit amount to $1,907. Why? The same financial buzzword that surrounded us in 2023 is following us into 2024: inflation. The Social Security benefit is increasing to keep up with the rising cost of living.
This increase means that certain classes will be getting a Social Security benefit of $4,873 a month. Of course, to reach that amount, you’d have to have been making the maximum taxable earnings since about the age of 22 and only started claiming Social Security at the age of 70. That’s not the case for the general public. But that doesn’t mean there aren’t ways to increase your Social Security benefit beyond natural inflation.
Here’s what financial experts advise you do to get a higher Social Security payment.
Wait Beyond Full Retirement Age To Access Social Security
One way to boost your Social Security benefit is to not immediately claim Social Security at your “full retirement age” (FRA). You can start getting your benefits at the age of 62, but you don’t receive your full benefits until your FRA. That depends on the year you were born.
For example, if you were born in 1960 or later, your FRA is 67. However, if you wait until you’re 70 to start taking Social Security benefits, the amount will be greater than if you started taking them at 67.
“Every year you wait until age 70, your benefit increases approximately 8%,” said Brandon Robinson, the president and founder at JBR Associates.
Robinson said one trick married couples can do is activate the Social Security income for the lower income spouse, then wait to start the Social Security for the higher wage earner until age 70. That way, you receive some benefits in the meantime, but experience larger ones later on.
Work at Least 35 Years
Gaps in your employment could be costing you when it comes to Social Security benefits.
“The Social Security Administration (SSA) calculates your benefit from the earnings of the highest 35-year period. The SSA uses an average indexed monthly earnings formula to calculate your monthly benefit,” Robinson said.
If you haven’t worked for 35 years total or had some years that didn’t meet the minimum income requirement to earn Social Security, Robinson said you can work into your 60s to offset years with no or low income.
Work Past Your FRA
If you are still working past your FRA — or past the age of 70 — your benefit could increase.
“If you continue to work and earn income after reaching your full retirement age (FRA), your benefit amount may also increase, even after age 70,” Michael Cocco, a CFP and financial professional at Equitable Advisors.
This goes back to the average indexed monthly earnings Robinson mentioned; if your earnings are higher than before, your Social Security benefit will also increase, because the average earnings are going up.
Talk to a Financial Advisor
While getting the most you possibly can from Social Security might seem appealing, it’s not something that should be taken lightly. Many factors can affect how much you can get from Social Security, and those should be considered before making any rash decisions.
“When to collect Social Security and how to maximize your benefits is such a personal decision,” Cocco said. “Each person and each family have different circumstances, such as needs for income, health issues, etc., so these suggestions should be reviewed with your financial advisor and/or a specialist from the Social Security office, to ensure you are making the decision that is in your best interest.”
A financial advisor or a representative from the Social Security office can also help you determine if there are ways you’re missing that could net you more money. They can look into additional options for you that you might not have considered, to make sure you’re getting the maximum benefit available to you.
One thing to keep in mind is that Social Security earnings can be taxed if your other income sources meet a certain amount. If you earn $25,000 to $34,000 as an individual filer, you are subject to income tax on 50% of your benefits. For joint filers, you’re subject to income tax on 50% of your benefits if you make between $32,000 and $44,000. If you earn more than $44,000 alongside your Social Security benefits, 85% of your benefits might be taxable.
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