I have more than 30 years to go before I can even think about claiming Social Security, but that doesn’t mean it’s not on my mind. I understand that the decisions I make now determine the size of my future checks, and I do everything I can to get the most out of the program. Here are three steps I take to secure big Social Security benefits in the future.
1. Keep working
You have already worked long enough to qualify for Social Security. I’ve earned more than 40 credits during my career so far, with one credit defined as $1,510 in earnings in 2022 and you can earn a maximum of four credits per year. But that does not mean that I have nothing to gain by continuing to work.
Aside from the fact that I need a job to pay my bills, continuing to work also boosts my future Social Security benefits. That’s because the government bases your benefit on your average monthly income over the 35 years of higher income, adjusted for inflation.
If I quit work now, I could still claim Social Security benefits once I turned 62, but it would be very small. I haven’t worked for 35 years yet, so I’ve had a lot of zero-income years that weighed on average monthly income. By continuing to work, I replace those zero-income years with profitable years, and this increases my average benefit.
I may work even more than 35 years. If I do, some of my previous years of work in which I earned minimum wage as a cashier at a grocery store will be replaced by my later high-income years as a freelance writer.
2. I try to keep my income high
Since I know Social Security benefits are based on your income during your working years, I’m doing what I can to keep income high today. As a freelance writer, I have a little more control over how much I earn from the average worker. But there are still things that traditional employees can do to increase their paychecks.
Working overtime or negotiating a raise can help. So employers can switch if you find a company willing to pay you more. You can also start a side hustle if you have some free time and a skill or service you’d like to share.
3. I save a lot for retirement on my own so I can delay my Social Security benefits
Although I can sign up for Social Security at age 62, I probably won’t claim a claim until age 70. That means skipping eight years of checks, but as a reward for doing so, when I sign up at age 70, my checks will be bigger.
Not everyone knows this, but the government gives everyone a full retirement age (FRA) based on their birth year. It’s anywhere from 66 to 67 for workers today. You are supposed to wait until this age to register if you want to take full advantage based on your work history. Each month you claim benefits before the FRA lowers your checks a little, while each month you delay benefits increases your checks.
My FRA is 67 and if I’m late up to 70, I’ll get 124% of the entire due for each check. If I qualify for an average monthly Social Security check of $1,665 in my FRA, I’ll get about $2,065 a month at the rate of 70. But if I call right away at 62, I’ll only get 70% of the full My accrual is per check, or about $1,166 per month.
I expect to live into my 80s or 90s, so even though I’ll get fewer years of benefits by delaying Social Security, I’ll probably make more money overall by doing so. Claiming a provision of $2,065 for 15 years would give me a lifetime interest of $371,700. This is about $50,000 more than the $321,816 I would get by claiming a provision of $1,166 for 23 years.
But delaying benefits doesn’t make sense for everyone. And even those who sometimes want to have a hard time covering their bills without Social Security assistance in the early years of their retirement. That’s why I’m saving as much as I can for retirement now. I want to have a big nest egg so I can pay all my basic expenses and put off Social Security until I’m ready for it.
Everyone is different, so my Social Security strategy may not work for you. But if you haven’t already thought about when you want to claim it or how you can grow your advantages, now is the time to do so.
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