The average retiree receives $1,669 a month from Social Security as of June 2022. Though those checks provide a much-needed boost when you’re in your golden years, living on just $1,669 a month is tough.
Unfortunately, that’s the reality many Americans face. About one-quarter of adults age 65 and older rely on Social Security benefits for at least 90% of their income.
Fortunately, you have plenty of options to beat the average benefit, particularly if you’re still working. Here are five strategies that will help you earn more Social Security than the average retiree.
1. Negotiate your salary
The easiest way to boost your Social Security benefit is to earn more during your working years. Social Security bases your benefit on an average of your 35 highest-earning years.
Of course, you can’t just snap your fingers and make a bigger paycheck appear. But you can use the sizzling labor market to your advantage. With the unemployment rate at just 3.6% as of June 2022, businesses are competing hard to attract and retain workers. Now could be a great time to score a bigger paycheck and more Social Security money by finding a better-paying job or negotiating with your employer for more money.
2. Get a side hustle
Another way to use the hot jobs market to your advantage is to earn more money with a side hustle. In 2022, you pay 6.2% of the first $147,000 of earnings toward Social Security taxes, plus 1.45% of your overall earnings in Medicare taxes (though some high earners pay an additional tax).
The closer you can get to the maximum taxable earnings in any given year, the bigger your future Social Security checks will be. However, if your side hustle pushes your income above the maximum taxable amount, it won’t matter for Social Security’s purposes. So if a side hustle pushed your income to $150,000 in 2022, in Social Security’s eyes, you only earned $147,000.
One downside: If you’re a freelancer or contractor, you’ll probably be on the hook for self-employment taxes. That means you pay both the employee’s and the employer’s share of Social Security and Medicare taxes, or 15.3% total versus the 7.65% most traditionally employed people pay.
3. Work longer
Since Social Security bases your benefits on your top 35 years of earnings, you want to work at least 35 years to maximize your benefits. Say you only worked for 32 years. You’d have three years plugged in as $0 for the Social Security average.
Each year you work where you replace a lower-earning year with a higher-earning year will also increase your benefit. This applies even if you’ve already started taking Social Security. Just be mindful of the fact that if you’re working while taking Social Security, the government may withhold part of your benefit if you haven’t reached full retirement age.
4. Delay, delay, delay
If you’ll be relying on Social Security for a significant amount of your retirement income, delaying as long as possible is often the best strategy. You don’t get your full benefit until full retirement age, which is between 66 and 67, depending on when you were born.
Though you can take benefits as early as 62, your benefit would be about 30% lower if your full retirement age is 67. But if you wait past full retirement age, you earn an extra 8% delayed retirement credit every year until you reach your maximum benefit at age 70. Someone who waits until 70 will typically have a benefit that’s 77% higher than they’d get if they’d started at 62.
5. Suspend your benefit
If you’ve already reached full retirement age and can afford to temporarily stop your benefits in exchange for bigger checks later on, you can voluntarily suspend your benefit. You’ll earn those 8% delayed retirement credits for each year your benefit is suspended. If you don’t reinstate them on your own, Social Security will automatically restart your benefits once you turn 70.
This won’t be a realistic option if you already rely on Social Security for a significant part of your retirement income. But if you have other sources of income you can live off of and you want to beat the average Social Security check, suspending your benefits could be a viable strategy.
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