A few simple moves on your part could leave you with much more retirement income.
One of the biggest Social Security myths you’ll hear is that the program pays all recipients the exact same monthly benefit. In reality, the monthly payday you’re entitled to in retirement will hinge on a variety of factors. And some of those may be things you can control. So if you’re eager to score a higher Social Security benefit, do these three things.
1. Work at least 35 years
The monthly benefit Social Security pays you will hinge on your specific earnings history. And you should know that your 35 highest-paid years of earnings are accounted for when calculating your retirement benefit.
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What this means is that if you don’t have a full 35-year work history, you risk getting stuck with a lower benefit throughout your retirement. So if you’re nearing the end of your career and realize you haven’t worked for 35 years, you may want to consider staying in the workforce a bit longer.
That doesn’t automatically mean that you have to remain employed in a full-time capacity, though. Part-time earnings count toward Social Security as well. So do earnings from a freelance job, provided you’re reporting the income and paying taxes on it (which you’re required to do anyway).
2. Try boosting your earnings as much as possible
The more you earn during your working years, the higher a monthly Social Security benefit you stand to collect (up to a point, since there’s a maximum monthly benefit the program pays). So if you’re able to push for higher earnings, you can set yourself up for more retirement income.
One almost surefire way to snag an income boost is to take on a side job while you’re working full-time. Sure, you could pursue a promotion at your main job that leads to higher pay. But that may be a tricky thing, especially if you work in a company where there’s not much upward mobility.
A side gig is more of a sure thing in the context of making more money — and it can do a lot of good for your retirement on top of just setting you up for more Social Security. Many people struggle to fund a retirement account because their paychecks are totally monopolized by bills. That’s been even more common in recent years, given the way inflation has surged. But if you work a side gig, that’s money you can use to contribute to an IRA or 401(k) plan so that come retirement, you’ll have more than just Social Security to fall back on.
3. File at the right time
You’re eligible for your complete monthly Social Security benefit based on your 35 highest-paid years of wages at full retirement age, or FRA. If you were born in 1960 or later, FRA is 67. Otherwise, it’s 66 or 66 and a specific number of months.
Now you’re allowed to sign up for Social Security at any point once you turn 62. But if you wait until FRA, at the very least, you can avoid a reduction to your monthly Social Security payments.
Furthermore, you’re allowed to delay your filing past FRA for a boosted benefit. Each year you postpone your claim raises that benefit by 8%.
Unfortunately, you can’t just delay Social Security indefinitely and keep growing your monthly benefit. Once you turn 70, there’s no longer a financial incentive to keep waiting. But if you’re looking at 67 as your FRA and you delay your claim until your 70th birthday, you stand to enjoy a 24% boost to your monthly benefit — and a permanent one at that.
Many seniors today who live on Social Security alone struggle financially. Hopefully, you won’t end up in that position, but rather, will have savings or other income sources to supplement those benefits. But it also pays to do what you can to get more Social Security throughout retirement. And these moves could be your ticket to doing just that.