Social Security benefits might be a lifeline for many older people, but depending solely on your monthly checks can be challenging. Benefits for the average retiree only amount to about $1,661 per month or just under $20,000 annually.
The good news is that you can increase the size of your monthly payments. And one tactic, in particular, has the potential to increase your benefits by hundreds of dollars each month.
How your age influences the amount of benefits you get
- Also Read: 3 Common Enrollment Mistakes That Could Cost You More in Medicare Premiums and Healthcare Expenses
- Also Read: 5 Little-Known Perks That Make Federal Jobs More Valuable Than Many Private-Sector Careers
- Also Read: Four FEGLI Premium Facts That Could Save You Big Before You Retire
You must file at your full retirement age (FRA), which ranges from 66 to 67 depending on the year you were born, to get the full benefit amount you are eligible for based on your earnings history.
Your benefits could be down to 30% if you apply as soon as feasible at age 62. However, if you wait to file for benefits until you are 70, you will receive your full benefit amount plus up to 32% more per month. In some circumstances, that might amount to several hundred dollars each month.
For instance, if your FRA is 67, filing at that age would result in a monthly payment of $1,661. Your benefit amount would be lowered by 30% if you claimed at age 62, leaving you with about $1,163 per month. A 24% bonus or almost $2,060 per month would be added to your full benefit if you waited until 70, compared to if you had filed at age 62. That is almost $900 more per month.
Delay filing for Social Security
Your monthly income can be significantly affected by delaying filing for Social Security by even a year or two. But not everyone should use this tactic.
When trying to increase your monthly income, delaying Social Security is frequently the wisest course of action. However, if your savings are running low, you might want to consider filing at age 62 rather than waiting until age 70 since the difference could be life-changing for some seniors. So occasionally, you might be better off filing your claim earlier.
Delaying Social Security may also not be a good idea, for instance, if you have cause to believe you may live a shorter lifespan than usual. If you apply for benefits earlier, you may be able to receive more throughout your lifetime, depending on how long you live.
Increase your income while working!
Aim to earn more money next. The $1,661 benefit is only available to those with average incomes. To be eligible for a larger reward, you just need to have made more money than the recipients by more than 50%.
So, consider ways to increase your income. You can engage in a side business for a certain period. That does not need to be a burden. You can drive and deliver food from restaurants to people who have placed online orders, or you might teach local children how to play the guitar. Another choice is to perform freelance work on online freelance markets and to produce and offer crafts online.
Delay Retirement.
Consider putting in more hours. Your Social Security payments are calculated by averaging your wages over the 35 years you made the most money (after adjusting for inflation). Therefore, the calculation will include five zeros even if you’ve only worked for 30 years at retirement. Try to put in at least 35 years at work.
Better yet, if you’re earning significantly more after 35 years of employment (again, on an inflation-adjusted basis), you might want to continue working for another few years since each high-earning year will exclude your lowest-earning year from the calculation.
There is no one-size-fits-all recommendation for when to start applying for Social Security, but it’s critical to be aware of your options. Not everyone should delay benefits, but doing so can significantly increase the size of your monthly payments, enabling you to live a more comfortable retirement.
