More than nine out of ten current retirees rely at least in part on Social Security benefits to fund their retirement income.
As of 2016, the maximum monthly Social Security benefit for an individual retiring at full retirement age is $2,639 per month. But the average retired worker receives just $1,341 per month, according to information from the Social Security Administration. An aged couple, with both receiving benefits, receives an average amount of $2,212 per month ($2,680 for widowed mothers with two children). And elderly widow(er)s receive an average monthly benefit of $1,285 per month.
Clearly, Social Security is not sufficient income for most of us by itself to fund an acceptable retirement lifestyle. But there are some things you can do to boost your monthly payout.
1.) Increase your earnings. Social Security benefits are based, in large part, on your contributions over your working years. The more you and your employer contribute in payroll taxes, the greater your benefit is likely to be, up to the statutory benefit cap. So the more money you earn now, if taxable as ordinary income, the greater the benefit you may eventually qualify for.
2.) Stay married. In the event of divorce, an ex-spouse may claim spousal and survivor’s benefits on an ex-spouse’s earnings provided the filer was married to the earner for at least 10 years, and is not currently married. However, there is an exception for widows and widowers over the age of 60.
3.) Be patient. The longer you wait to claim your Social Security benefits, the higher your monthly benefit will be. For those born between 1943 and 1954, your normal retirement age is 66. For those born in1960 or later, normal retirement age is 67. But you can get a bigger monthly benefit if you wait a few years longer: Social Security will add 8 percent per year plus inflation to your eventual monthly check when you delay taking benefits past full retirement age up to age 70.
If you can stay in the work force longer, you will have a bigger monthly cushion to retire on. However, if you are in poor health, or you have reason to believe your life expectancy will be shorter than average, you may want to go ahead and take Social Security benefits at an earlier age.
4.) Step up to the larger benefit in the event of the death of a spouse. If your spouse passes away, you are entitled to the deceased’s benefit if his or her benefit is larger than yours. To maximize the monthly benefit, you may consider putting off the claim until you reach normal retirement age, if you are not there already.
Alternatively, you could take the survivor’s benefit early, while working or living off of other sources of income, and then switch over to your own benefit based on your earnings once you reach full retirement age.
5.) Double up on spousal benefits. If you have been married at least ten years and then divorce, both of you may benefit from refraining from collecting your own Social Security benefits right away. Instead, you each may be able to claim spousal benefits based on the others’ earnings, and waiting until full retirement age or age 70 before filing for your own Social Security benefits. To make this work, you and your ex must be divorced for at least two years, and either age 62 or older or receiving disability benefits.
There is no one-size-fits-all technique that maximizes lifetime Social Security benefits in every case. You may want to work with a retirement income expert to explore different scenarios to see what course of action works for you.