Here’s how to get a higher Social Security paycheck than the typical retiree.
Many seniors are surprised to learn that Social Security will not replace their pre-retirement pay in full. If you are an average earner, you can expect your benefits to replace about 40% of your income. If you’re a higher-than-average earner, they can replace an even lower percentage.
As of July 2021, the average senior on Social Security was collecting about $1,557 per month in benefits. And while it’s not a bad paycheck, when you have a strong nest egg to tap, it’s not exactly generous in itself.
In fact, if you look to Social Security as your only source of retirement income, you’ll probably end up strapped significantly more cash as a senior than if you were paid average benefits. And that’s why it’s important to do what you can to increase the monthly benefit you get. Here are some strategies that will help you achieve that goal and take home more money than the average senior.
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1. Increase your earnings
The monthly Social Security benefit you’re able to collect in retirement will depend on how much money you make during your 35 highest-earning years — so the more money you make, the higher your final benefit. Will happen.
There are different ways for you to increase your income. First, you can aim to boost your job skills so that you qualify for more promotions and raises. Secondly, you can take the job on top of your main job. As long as you pay taxes on your behalf, that income will count for Social Security purposes.
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2. Work longer
Many people make a lot more money at the end of their careers than they do at the beginning, and chances are, you will too. And so if your earnings really go up once you expand your career, you’ll replace a few years of lower earnings with higher earnings in your personal benefit formula. This will lead to a higher paycheck from Social Security down the line.
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3. Delay Your Filing As Much As Possible
Once you reach full retirement age, or FRA, you’re entitled to your monthly Social Security benefit based on your salary history. The FRA is 67 for anyone born in 1960 or later.
However, you do not have to file for benefits in the FRA. You can sign up at age 62, but you should know that each month you file past FRA, your monthly benefit goes down.
On the other hand, for each month past your FRA you delay filing, your benefit increases by two-thirds of 1%. This means that on an annual basis, delaying your filing will increase your benefit by 8%.
Once you turn 70, you can’t increase your Social Security benefit, so it doesn’t pay to delay your filing beyond that point. But if you’re looking at an FRA of 67 and you defer your filing until age 70, your benefit will increase by 24% — for a lifetime.
Don’t settle for average profit
If you want to receive more Social Security benefits than the typical senior, you may need to make some kind of sacrifice. This could mean taking on a side gig on top of your main job to increase your earnings, expanding your career, or waiting to file for benefits for as long as possible. to push
The upside, however, is that once you get more benefits, you’ll end up with more financial security for your entire retirement. And that’s reason enough to try.
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