Whether you love your job or can’t stand it, you probably want to retire from it eventually. While you’ll hopefully have savings to fall back on for your senior years, you may end up relying pretty heavily on Social Security to cover your bills in full. That’s why it’s important to set yourself up with a generous monthly benefit.
The average retired worker on Social Security collects about $2,000 a month these days. That’s not a bad income when it’s combined with other sources. But if you want to do better than $2,000 a month, here are some moves worth making.
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1. Work for at least 35 years before retiring
When calculating your monthly benefits, Social Security uses a specific formula that takes your 35 highest-paid years of income into account. You can qualify for Social Security with a shorter work history, but for each year you’re missing income within your top 35, you’ll have a $0 factored into your benefits calculation.
For this reason, it’s a good idea to try to work at least 35 years before wrapping up your career. If you can’t pull off 35 years of full-time work, see whether it’s feasible to fill in some of those missing years with part-time work.
For example, say you’re 63 and can’t manage a full-time job any longer, but you’ve only worked 34 years in total. Transitioning to part-time work for one year could help you land a larger monthly Social Security check.
2. Boost your income while you’re working
We just established that Social Security calculates your benefits based on your income history. So, if you’re able to increase your income, you could end up enjoying a larger monthly paycheck from Social Security in retirement.
But that doesn’t mean your only option is to convince your boss to give you a raise. You can also boost your income by working a side gig or starting a business of your own.
Just keep in mind that there is a maximum amount of income that counts toward your future Social Security benefits each year. This year, it’s $176,100. So, if you’re already earning $180,000 a year at present, there’s no need to push yourself to earn more from a Social Security standpoint (though there’s, of course, an upside to having extra money to play around with).
3. Delay your Social Security claim
Social Security claimants have choices when it comes to signing up for benefits. You can file as early as age 62. And you’ll be eligible to collect your monthly benefits without a reduction at full retirement age, which is 67 for anyone born in 1960 or later.
But if you’re interested in beating the average Social Security benefit today, you may want to delay your claim beyond full retirement age. For each year you do, up until age 70, your benefits get boosted by 8%.
Just keep in mind that while delaying your claim gives you more Social Security each month, it may not give you more Social Security in your lifetime. If you wait until 70 to sign up for benefits but don’t end up living a very long life, you could end up with less total income from Social Security. A delayed claim usually makes sense when you have reason to believe you’ll live well into your 80s or beyond.
There’s no need to settle for the average monthly Social Security benefit when you can potentially do better. These moves could help you walk away with much larger monthly paychecks for life. And that’s a good way to make your retirement more enjoyable and stress-free.
