It’s harder to do than you might think, but you can still beef up your benefits — and you should.
If you’re imagining that Social Security will provide much of your income in retirement, think again. The average monthly benefit for retired workers as of February 2023 was $1,831 — or only about $22,000 for the year.
Fortunately, there are ways to increase your future benefits — and it’s well worth doing so. But if you’re aiming for the maximum monthly benefit of $4,555 per month (nearly $55,000 on an annual basis), you may have to settle for less.
Here are two key steps to take if you want the biggest benefit from Social Security.
1. Maximize your earnings — for 35 years
First, perhaps obviously, is the fact that the more you earn, the more you’ll collect in Social Security benefits — up to a point. That point is referred to as the “Contribution and Benefit Base,” and it represents the limit of Social Security taxation of wages. It gets adjusted regularly, and for 2023, it’s $160,200. (In 2022, it was $147,000.) So in 2023, earnings up to $160,200 get taxed. That means that’s the income level at which you’re contributing the most to the program, so you can expect to collect the most from the program.
Here’s the rub, though: Your benefits are based on the 35 years in which you earned the most, so you’ll need to hit that cap for 35 years. For many of us, it’s far too late to achieve that. If you’re still rather young, though, you stand a chance — especially if, once you work for 35 years, you’re earning the maximum or more. If so, each additional year of earnings beyond 35 will kick out the lowest-earning year from the calculation. That way, you might be able to eject any years in which you didn’t reach that earnings limit.
Clearly, that’s rather difficult to do. Still, even if you fall short of achieving the maximum Social Security benefit, it can be well worth increasing your future benefit as much as you can. Every little extra bit is likely to come in quite handy in retirement.
2. Delay collecting your benefits until age 70
Maxing out your earnings for a whopping 35 years is not enough to secure you that maximum Social Security benefit, though. You’ll also have to put off collecting that benefit. Each of us has a “full retirement age” at which we can start collecting the full benefits to which we’re entitled, based on our earnings history. For most of us, it’s age 66, 67, or somewhere in between.
But you can start collecting your benefits as early as age 62 and as late as age 70, with your benefits getting smaller if you claim early and bigger if you delay. (You could delay past age 70, but there’s no upside to doing so.)
The table below lets you see how much of your full benefits you’ll collect based on when you start collecting and on what your full retirement age is.
| START COLLECTING AT: | FULL RETIREMENT AGE OF 66 | FULL RETIREMENT AGE OF 67 |
|---|---|---|
| 62 | 75% | 70% |
| 63 | 80% | 75% |
| 64 | 86.7% | 80% |
| 65 | 93.3% | 86.7% |
| 66 | 100% | 93.3% |
| 67 | 108% | 100% |
| 68 | 116% | 108% |
| 69 | 124% | 116% |
| 70 | 132% | 124% |
DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.
This is another reason why it’s so hard to qualify for that maximum benefit: Many of us simply can’t delay, because we need that income as soon as possible. If you can delay, though, consider doing so. Delaying is a smart move for many people, but for others, such as those in poor health or with a decent chance of living a shorter-than-average life, claiming early is the way to go. Remember that while your checks will be smaller if you claim early, you’ll receive many more of them than if you’d delayed.
As you plan for retirement, be sure to learn more about Social Security, so that you can make smart decisions regarding when to start collecting.
