The 3 Easiest Ways to Increase Social Security Benefits

Social Security benefits are a crucial retirement income source for many seniors, but the average benefit is just $1,544. The good news is, there are options to earn a higher monthly income than this average.

While Social Security is never going to be enough to support you, you can increase the size of your check by employing a few simple techniques. Here’s some advice from three Motley Fool retirement experts on the easiest ways to boost your benefits.

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Delay your benefits claim

Christy Bieber: If you want a simple way to raise your Social Security benefit, you’ll simply wait as long as possible to claim it.

See, retirees receive their standard benefit amount if they start getting Social Security checks at full retirement age. Depending when you were born, your FRA is between 66 and 2 months and 67.

If you can delay past FRA, though, you can get larger checks. In fact, even waiting a single month will result in an increase to benefits because you’ll earn a delayed retirement credit equal to 2/3 of 1%. These monthly delayed retirement credits end up raising your benefit by 8% per year for each full year you wait until age 70.

Of course, benefits can be claimed even before full retirement age — as early as 62. But this could reduce your checks by as much as 30% because early filing penalties apply on a monthly basis. Early filing penalties take 5/9 of 1% from your check per month for each of the first 36 months and an additional 5/12 of 1% before that. Avoiding these penalties means more money in your pocket.

Of course, you will forgo some checks and need to break even for that missed income by getting higher benefits for long enough. This could take over a decade. But for a majority of retirees, a delayed claim pays off with both higher monthly benefits and more lifetime benefits as well.

Give your income a boost

Katie Brockman: Your income throughout your career is one of the biggest factors in determining your Social Security benefit amount. The more you earn (up to a certain point), the more you can potentially collect in benefits.

The maximum you can receive from Social Security is $3,895 per month. To achieve that amount, you’ll need to reach the maximum taxable earnings limit — which for 2021 is $142,800 per year. This cap is the highest income subject to Social Security taxes, and by reaching this limit, you can earn as much as possible in benefits.

The majority of workers won’t be able to reach the $142,800-per-year wage cap, and that’s OK. If you’re able to increase your income slightly (even if you’re not earning anywhere near the maximum earnings limit), you can earn bigger Social Security checks in retirement.

When it comes to finding ways to boost your income, the sky is the limit. You may decide to pick up a side hustle, for example, or ask for a raise at work. You could also find a way to start generating passive income, such as renting out a room in your house or investing in dividend stocks.

Even the smallest steps can make a significant impact over time, so don’t discount the power of earning a few extra dollars here and there. Over the course of your career, small increases in your income can result in larger Social Security checks.

Work longer than 35 years

Maurie Backman: The monthly Social Security benefit you’re entitled to collect in retirement will be unique to you. Specifically, it will be calculated based on your 35 highest-paid years in the workforce. And so if you want to snag a higher benefit, extending your career so you end up working more than 35 years could be your ticket to it.

Many people see their earnings peak at the tail end of their careers. If you push yourself to work a few extra years once you’re making a lot more money than you did in the past, you’ll replace a few years of lower earnings with higher earnings in the formula used to calculate your monthly benefit.

Here’s another way to look at it. Say that within your 35 highest-paid years in the labor force, your two lowest-earning years had you making $40,000. If you’re now earning a salary of $95,000, even if your income doesn’t go up, if you work a few more years so you have 37 years of work experience under your belt instead of just 35, you’ll replace two years of $40,000 in earnings with $95,000 instead.

The result? A higher Social Security benefit to enjoy for the rest of your life.

The $16,728 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

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