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Try These 3 Evidence to Beat the Average Social Security Benefit of $1,671

For retirees, the average monthly Social Security benefit is $1,670.95, or about $20,000 per year. This number does not include benefits for the spouses and children of retired workers, who generally receive a fraction of the breadwinner’s income.

The three main factors that affect your Social Security benefit are your application age, your work income, and how long you work. Beat the averages in at least two of these areas and you’re on your way to earning more than the $1,671 Social Security average in retirement.

Read on for three strategies that can help you get there.

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1. Wait to collect social security

According to an analysis by Boston College’s Center for Retirement Research, some 34% of women and 31% of men who filed for Social Security in 2019 were 62 years old. This is the earliest age at which you can start collecting social security.

The problem is that filing for Social Security at age 62 reduces your benefit by up to 30%. If your focus is on higher Social Security income, waiting to apply is the easiest strategy. Every month you delay your application for social security, your allowance increases.

Once you reach full retirement age (FRA), your benefit is equal to your “primary insurance amount”. This is your benefit, as calculated by the Social Security formula, without any early claim deductions or deferred retirement credits (more on that below). Your FRA is between 66 and 67 years old, depending on the year you were born.

Defer claiming benefits beyond your FRA and you’ll earn deferred retirement credits. These increase your benefit by 8% per year until you turn 70.

Note that waiting for a higher benefit is not always the right choice, as you have to give up income initially. Consider doing a break-even analysis to determine when the higher benefit makes up for the shortfall.

2. Earn more

You can also push your retirement benefit above average by earning a high salary. The average salary for workers aged 55 and over is $57,980. Set a goal to take home more than that in the years leading up to retirement.

You can apply for a promotion, ask your boss for a raise, or get a second job. You could even start a side hustle to increase your income. The key here is to report your hustle earnings and pay your self-employment taxes. This way, Social Security will include the income in your official work record.

3. Work 35 years or more

Social Security calculates your benefit by averaging your inflation-adjusted income from your 35 best-paid years. If you’ve only worked, say, 30 years, Social Security includes the missing five years with zero earnings in the average calculation.

These years without income reduce your average and therefore your benefit. As a simple example, let’s say you earned an inflation-adjusted salary of $55,000 each year of your career. With 30 years on your work record, your average income using the Social Security formula is around $47,000. Work for 35 years and your average will climb to $55,000, which is your actual retirement income.

If possible, put the 35 years of work. There is increased revenue waiting on the other side.

Beat the average in retirement

Beating the average Social Security benefit is a realistic goal when you know what levers to pull. Wait until FRA (or longer if that makes sense) to apply for Social Security, earn an above-average annual income, and complete 35 years of paid work.

Your efforts could be a valuable step towards generating the above-average retirement benefit you deserve.

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