Here’s exactly what it takes to boost your Social Security by $100 a month
Social Security provides a vital financial resource in retirement. But for most retirees, that’s not a big deal. The average monthly Social Security payment to retirees is just $1,620. It’s not enough for most people to live on.
However, there are several things you can do to increase your Social Security benefits, and not all of them are as difficult as you think. Below, we’ll look at three different ideas that you can use alone or in tandem to help you get a bigger Social Security check each month.
1. Increase your average monthly salary by $313 per month
The amount of your Social Security 3 benefit depends on your primary insurance amount, which in turn is determined by your income history. Specifically, Social Security looks at the 35 years you earned the most on an inflation-adjusted basis, then uses your work history to determine your average indexed monthly income. A primary insurance amount of $1,620 corresponds to an average monthly salary of just over $3,200.
If the average benefit recipient wishes to increase the primary insurance amount – and therefore the monthly check at full retirement age – by $100, the average indexed monthly earnings must increase by $313. This would require raising a full-time salary from around $38,500 to nearly $42,250.
Those who expect to claim their Social Security before full retirement age need an even bigger pay rise. That’s because every dollar of extra income yields less of an increase in Social Security checks when you file an early claim — up to 30% less in some cases.
2. Work another 37 months
If you haven’t worked for 35 years in your career, the Social Security Administration simply puts zeros in the formula that determines your average lifetime earnings. If you work longer to complete a full 35-year earnings history, it can significantly increase your benefits.
For example, a person earning the equivalent of $42,250 per year would qualify for $1,620 in monthly benefits after working just under 31 years and 11 months. But if you keep working the extra three years and one month to have a full 35-year history, you’ll earn an extra $100 that goes toward your check. Again, this only applies if you are claiming at full retirement age, with earlier claims giving you less of a positive effect from your extra work.
3. Wait nine months to apply after reaching full retirement age
Finally, you can increase your Social Security retirement benefit by waiting longer before applying. For each year you wait beyond full retirement age, you increase your monthly payment by 8%. So to increase your benefits from $1,620 to $1,720, you would have to work about nine more months.
The effect of waiting longer if you intended to claim earlier may differ depending on your exact age at the time of claim. However, the results are generally similar to these, with added rewards for waiting a little longer before taking your Social Security checks.
Get as much as you can
None of these things are easy to do, and they all involve sacrifice. However, the payoff can be even bigger than just getting a bigger Social Security check. If you can increase your income by a small amount, it will also free up more money to put aside in retirement savings to supplement your social security. For most Americans, it’s the key to true financial independence, and it makes for a much more comfortable and secure retirement.