Try These 3 No-Brainers to Beat the Average Social Security Benefit of $1,665
Jhe average senior raked in $1,665 a month from Social Security in March 2022, but there are many who did much better. The maximum Social Security benefit this year is $4,194 per month. But to achieve this, you need a very high income throughout your working years. Luckily, there are ways to boost your checks that don’t involve a six-figure salary. Here are three that everyone should consider.
1. Work at least 35 years
The Social Security Administration bases your benefit on your average monthly income during your 35 highest earning years, adjusted for inflation. This is called your average indexed monthly earnings (AIME). Those who don’t work at least 35 years have years without income taken into account in their calculation, and even one of these can reduce your benefit.
For example, if you earned $50,000, adjusted for inflation, every year for 35 years, your AIME would be $4,167. The government then inserts this into a formula to determine the amount of your monthly benefits. If you were 62 in 2022, you would receive $1,927 per month from the program with an AIME of $4,167.
But if you only worked for 34 years, your AIME would drop from $4,167 to $4,047 and your monthly benefit amount would drop from $1,927 to $1,889. That’s a difference of $38 per month. It may not seem like much, but over time it adds up. If you claim Social Security for 20 years, that’s a difference of over $9,100.
That’s why it’s best to work at least 35 if possible and longer if you can. Most people earn later in their career than when they were young. Continuing to work after age 35 often boosts your Social security checks because these later, higher-earning years eventually override your earlier, lower-earning years in the calculation of your benefits.
2. Check the accuracy of your income statement
The government keeps track of the amount of money you’ve paid Social Security taxes on over the years in your income file. You can visualize it by creating a My social security account. When you first set up your account, you will need to answer some identity verification questions. But once done, you can simply log in with your username and password.
It’s a good idea to check your income statement at least once a year to verify that the income shown here matches your own statements. Most of the time it is correct because its information comes directly from the IRS. But if you made a mistake in your tax documents, such as transposing a digit in your Social Security number or failing to notify your employer of a name change, you might see errors. This could result in a lower Social Security benefit than you deserve.
You must immediately inform the social security administration of any anomaly by completing a Earnings Statement Correction Request Form and submit it, along with copies of your own records showing how much you actually earned during the year.
There is an exception for high earners. You do not pay social security contributions on all of your income. In 2022, you only owe taxes on the first $147,000 you earn, and in previous years this limit was lower. If you earned more than that, your income statement may incorrectly show a different number than your actual income for the year. Check the maximum income subject to Social Security tax for the year in question before reporting it as an error to the Social Security Administration.
3. Delay benefits if it makes sense to you
You can apply for social security from the age of 62, but you must wait until your full retirement age (FRA) to get the amount you are entitled to based on your work history. This is between 66 and 67, depending on your year of birth.
Each month you apply for benefits under your FRA reduces your checks. Those with an FRA of 66 get 75% of their full benefit by check at age 62, while those with an FRA of 67 only receive 70% of their full benefit by check when they claim immediately.
Delay benefits gradually increases your checks until you reach age 70 and are entitled to your maximum benefit. This represents 124% of your full check benefit if your FRA is 67 or 132% if your FRA is 66.
Those who expect to live to age 80 or more will likely get the most out of the program by delaying benefits. But those with shorter life expectancies or little or no savings may need to start earlier.
There is a calculator in your My Social Security account that can help you determine how much you will receive from the program at different starting ages. Use it to help you decide when you want to sign up for benefits.
The three tips above aren’t the only ways to boost your Social Security benefits, but if you follow all three, you should have a good chance of beating the average monthly check of $1,665. Those who really want to get the most out of the program should also look for ways to increase their income. Even a small increase today could result in much larger checks in retirement.
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