3 Ways to Score a Higher Social Security Salary – Community News
Social Security

3 Ways to Score a Higher Social Security Salary

With some things in life you get what you get and you have little control. Not so with Social Security. Yes, the benefits you receive in retirement are determined by a certain formula, but you can still do certain things to generate higher future payments.

Here are three strategies for increasing your Social Security benefits.

Two people looking at the camera.

Image source: Getty Images.

1. Earn more

Perhaps it’s obvious that the more you earn in your working life, the bigger your Social Security benefits will be – up to a limit. Here’s some context: The average monthly retirement benefit was recently $1,563, or about $18,750 per year. The maximum benefit for 2021, meanwhile, is $3,895. To be eligible for that maximum benefit, you must have earned the maximum throughout your working life — and have been deferred from collecting your benefit until the age of 70.

Few of us will be able to make the most of our earnings every year, but we can still strive to boost them as much as possible, and there are multiple ways to do this. You can of course ask for a raise every two years, ideally while showing why you deserve one. It can help to move from company to company every few years, securing higher positions on the career ladder each time. Earning professional certifications or additional degrees can also help you qualify for better-paying jobs. You might even consider a career switch, if there’s another attractive path that pays more.

You can also just do a side job for a few years (or a lot of years), which can significantly increase your income. Just making an extra $100 a week adds about $5,000 to your income — and if you find the right gigs, you might make a lot more than that.

2. Delay in receiving benefits

Each of us can start collecting our benefits at age 62 and only at age 70. For each of us there is a full retirement age (FRA) in between, at which we full benefits we are entitled to, based on our income history. (For most of us, that age is 66 or 67.) If you start collecting your benefit checks before you reach full retirement age, they will be smaller (although you will accumulate more). Conversely, for every year after your full retirement age that you delay (until age 70), they will increase by about 8% (although you will get fewer checks).

The table below shows you how much of your full benefit you will receive, depending on when you start collecting:

Start collecting at:

Full retirement age of 66

Full retirement age of 67

62

75%

70%

63

80%

75%

64

86.7%

80%

65

93.3%

86.7%

66

100%

93.3%

67

108%

100%

68

116%

108%

69

124%

116%

70

132%

124%

Data source: Social Security Administration.

Not everyone can afford to delay — some will just need that retirement income as soon as they can get it, perhaps due to an unexpected job loss or health problems. But if you can delay, it will increase the size of your benefit checks.

3. Coordinate with your spouse

Finally, if you are married, coordinating with your spouse can also bring greater benefits.

Imagine this scenario: You are married and your spouse has generally earned much more than you. You will both start collecting benefits as soon as possible, at age 62. For example, you collect $1800 per month and your spouse collects for example $2,300. If your spouse dies first, your household can no longer cash both checks — instead, you get the larger of the two, so your benefit increases to $2,300.

But if your spouse could have delayed cashing until age 70, that $2,300 check could have grown by 24% — to a $2,850 check. Devising strategies with a partner can be a powerful step to maximize income.

It’s worth taking some time to learn about Social Security, as it will likely provide a meaningful portion of your retirement income, and it’s worth getting the most out of the program.