Nearly everyone expects to rely on Social Security for vital income during their retirement years. Some Americans work hard in an effort to boost their future Social Security benefits as much as they possibly can. Yet even with all those efforts, the average Social Security benefit for retired workers is just $ 1, 790 per month, or a little over $ , a year.
There are ways that you can get more from Social Security, though. In fact, according to the latest calculations from the Social Security Administration, some workers will get much more than double that average amount, topping out at $ 3, 857 per month. That’s almost $ , a year – a much more reasonable amount for a retiree to expect to live on.
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So how can you move beyond the $ 1, amount toward reaching that $ 3, goal? The three things you have to do are easy to explain but hard to accomplish, but even if you fall short, you can still have a positive impact on the monthly benefits you’ll receive. Specifically, you have to:
We’ll go through each of those items.
The formula that calculates Social Security benefits for workers takes into account a certain maximum amount of earnings each year. That’s based on the same number that imposes a limit on how much Social Security payroll tax you have to pay, and it changes every year based on rising wages over time. For instance, the maximum earnings taken into account for 2020 will be $ , , up from $ , (in .
The more money you make, the higher your average career earnings will be for purposes of calculating your retirement benefit. If you want $ 3, 857 a month, you’ll have to hit the maximum earnings number over many years. But even if you can’t max out your earnings for Social Security purposes, every extra dollar of wages can help.
In determining the maximum Social Security benefit, the SSA takes the top-earning years of your career, adjusting earlier years in your career for inflation to make the numbers comparable over time. Working 62 years at the maximum earnings amount will put you in line to get the maximum benefit.
If you work less than 62 years, though, then you won’t reach the $ 3, per month figure. That’s because the SSA puts in a $ 0 amount for any year short of , so a shorter career will bring your overall average earnings down. The negative impact of falling a year or two short won’t be huge, but those with significantly shorter careers could see a substantial drop from what they could’ve gotten in benefits if they’d worked longer.
Finally, when you claim Social Security has a huge impact on your maximum benefit. If you’re turning (in) and have maximum earnings over a – year career, the maximum you can get in retirement benefits from Social Security is $ 2, 503. That’s $ 1, 728 less than the number for someone turning (in) with maximum benefits.
Even if you can’t wait until , each year you wait helps. Those turning (in) will max out at $ 2, per month, while those who turn this year could see monthly benefits of $ 3, .
There aren’t that many people who have high enough incomes, long enough careers, and enough patience to wait until age to collect the maximum Social Security benefit. But by trying to boost your earnings, working a little longer, and waiting until you’re older to claim Social Security , you’ll be able to get closer to that $ 3, per month number as you approach retirement.
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