Social Security: 3 Simple Ways to Beat the Average Benefit

A larger benefit amount is within reach. Social Security benefits can make or break retirement for many older adults. Nearly one-quarter of workers expect their monthly checks to be their primary source of income in retirement, according to a 2022 report from the Transamerica Center for Retirement Studies. For some retirees, Social Security is their only income. However, the average retiree benefit amount as of May 2023 is around $1,836 per month, or just over $22,000 per year. As costs continue to increase, most older adults may find it difficult to live primarily on Social Security. Fortunately, there are three simple moves for increasing your benefit amount. With the right strategy, it’s easier than you might think to beat the average monthly payment.

1. Work for at least 35 years

The Social Security Administration calculates your benefit amount based on the 35 highest-earning years of your career. Your wages throughout those years are averaged and then adjusted for inflation, and the result is your basic benefit amount — or the amount you’ll collect at your full retirement age (FRA). If you haven’t worked a full 35 years by the time you start claiming, you’ll have zeros added to your average to account for the time you weren’t working. To earn as much as possible from Social Security, make sure you’ve worked for at least 35 years before you begin claiming.

2. Get as close as possible to the wage cap

Only income up to a certain limit affects your benefit amount. The wage cap is the highest income subject to Social Security taxes, and once you pass that limit, it won’t result in larger payments. The wage cap changes most years to account for inflation, and in 2023, it’s $160,200 per year. By consistently reaching this limit over decades, you’ll be on track to earn the maximum possible benefit amount (which is $4,555 per month in 2023). For most people, reaching the wage cap consistently is an unrealistic goal — and that’s OK. By getting as close as you can (even if you’re nowhere near it), it will still result in larger monthly payments.

3. Delay claiming benefits

The age at which you begin claiming Social Security will have an enormous impact on your benefit amount. To collect the full benefit amount you’re entitled to based on your work record, you’ll need to wait to file until your FRA — which is age 67 for anyone born in 1960 or later. If you begin claiming any sooner than your FRA (as early as age 62), your benefits will be permanently slashed by up to 30%. On the other hand, if you delay benefits up until age 70, you’ll receive your full benefit amount plus a bonus of at least 24% per month. This can amount to hundreds of dollars per month, which can go a long way toward beating the average benefit.

Small moves can make a big difference

It’s not always easy to increase your benefits, but even subtle changes can add up. For example, maybe you can’t delay benefits until age 70 but can wait a year or so to begin claiming. That alone can dramatically increase your monthly payments. Or maybe it’s not realistic to work 35 years or reach the wage cap. But if you can work even a few months longer or boost your income by a couple of thousand dollars per year, those tactics will also result in a larger benefit amount. The more of these moves you’re able to incorporate, the better your chances are of beating the average Social Security benefit — and enjoying a more financially secure retirement.