The average American is right to worry about how they will get by in retirement, because the average American has not socked away nearly enough for the future. Fortunately, there’s Social Security. According to the 2021 Retirement Confidence Survey, 87% of workers reported expecting Social Security to be a major source of income in retirement, while 92% of retirees said that it was, indeed, a major source.
Unbeknownst to many Americans, there are things you can do to make your future Social Security checks bigger — as much as 24% bigger, and perhaps even more than that. Here are several strategies to consider.
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1. Work at least 35 years
First off, aim to work for at least 35 years — because the formula that determines your ultimate benefits is based on an (inflation-adjusted) average of what you earned in your 35 highest-earning years. So if you’ve only worked, say, 28 years, there will be seven zeroes factored into the calculation, resulting in a smaller benefit.
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2. Earn as much as you can
Next, this might be obvious, but earn as much as you can. Yes, your current income might seem just fine, but if it could be higher, it could increase your ultimate Social Security benefits, as bigger earnings would be factored into the calculation. You might boost your earnings in a variety of ways, such as:
- Asking for a raise (perhaps every few years)
- Taking on a side gig or two for at least a few years
- Earning a professional designation to qualify you for higher-paying positions
- Moving from one job to a higher-paying one every few years
- Changing careers entirely, into a higher-paying (but still satisfying) one
Also, consider working a few years beyond the minimum of 35 — because if you’re earning more (on an inflation-adjusted basis) than you have before, each additional year you work will kick out the lowest-earning year used to calculate your benefits.
3. Consider delaying starting to collect your benefits
A big way to control how much you collect from Social Security is by starting to receive your benefits earlier or later than your “full retirement age” — the age at which you can start collecting the full benefits to which you’re entitled, based on your work history.
You can start collecting benefits as early as age 62 and as late as age 70 — and for most of us, our full retirement age is 66, 67, or somewhere …….