In retirement, Social Security advantages can be a significant source of income for millions of older people. According to a 2023 survey by the Nationwide Retirement Institute, 21% of American people 50 and older claim they have no additional retirement income besides Social Security. So it makes sense to make sure you’re maximizing your benefits. While every circumstance is unique, it might occasionally be beneficial to compare your monthly expenses to the average. Here are some tips for maximizing your advantages as well as how to assess your current situation.
The Average Benefit From Social Security
Three key elements will determine how much you earn from Social Security: the number of years you’ve worked, your career earnings, and the age at which you first file a claim. The typical retired worker will receive benefits of $1,840 per month as of August 2023. Social Security pays about $890 monthly on average to people who are eligible for spousal benefits. Additionally, the average disabled person receives about $1,487 monthly. You can verify your benefit sum through your statements to see where you stand. The maximum monthly benefit from Social Security as of 2023 is an astounding $4,555. So, before exceeding the benefit cap, the average worker has lots of room to increase their benefits.
How To Raise Your Benefit Amount
Make sure you’ve put in sufficient time: The SSA (Social Security Administration) determines your benefit by averaging your salary over the 35 years of your employment during which you earned the most money. The amount you will be paid when you reach full retirement age is the result of multiplying that figure by inflation. Your average earnings and monthly benefit will be reduced if you have not worked for the full 35 years before filing.
Raise your income: The largest amount of income governed by Social Security taxes is the highest taxable earnings limit. This cap will rise to $160,200 annually as of 2023. The closer you can go to this cap, however, the more money you’ll make each month. You don’t necessarily have to hit it to enhance your benefits.
Wait a little while longer to start claiming: You can apply for Social Security at the age of 62 or at any time after that, but the more you wait (up until you reach 70), the more you’ll earn each month. When you file at age 62, your benefit is permanently reduced by up to 30%. Wait until you’re 70, yet, and you’ll get your entire benefit amount in addition to at least 24% more each month.
It pays to have a fundamental understanding of how Social Security operates because it can significantly impact retirement. You can position yourself for a more comfortable retirement when you’re aware of how much to expect and how to maximize your monthly payments.
