(HealthyExaminer.com) – The average value of Social Security benefits fluctuates each year depending on the cost of living. In 2023, the average social security benefit was $1,827 a month. Many beneficiaries may be eligible to boost those benefits by another $1,830.
Interested? In order to receive this boost, the work needs to begin several years before retirement.
How Social Security Administration Calculates Retirement Benefits
Income earning helps the Social Security Administration (SSA) determine the primary insurance amount (PIA), which is the amount a person would receive if they claimed benefits. The SSA uses 35 years of income to calculate program benefits.
The amount a claimant can receive varies depending on when SSA benefits are sought. Claiming benefits before retirement age will result in a lower amount based on the idea that benefits will need to be distributed over a longer period of time, assuming an average lifespan. Claiming benefits after full retirement age (FRA) will yield a higher monthly SSA benefit.
How to Maximize Social Security Retirement Benefits
To access an extra $1,830 a month from SSA, you’ll need to either maximize your highest income earning years or delay the receipt of your benefits by retiring later.
Increasing Yearly Earnings
Your 35 highest earning years determine your SSA benefits. Beneficiaries who earn and contribute more to the program tend to receive higher benefits. Smaller amounts earned and contributed result in smaller monthly payouts.
You’ll need to increase your annual earnings in order to receive the extra $1,830 of monthly SSA benefits. Younger workers should consider this earlier in their careers rather than later as it takes some advanced planning to achieve this.
SSA’s top earners in 2022 made approximately $147,000 in the 35 years of highest earnings. Beneficiaries should be alert to average income changes to keep up with SSA.
Delaying Receipt of Social Security Benefits
Full retirement age (FRA) for SSA is 66 or 67 depending on your birth year. It was once 65. The current FRA is the year at which you can receive full SSA benefits. Those who retire earlier than the FRA will receive reduced benefit amounts with the assumption they’ll live to enjoy those benefits for longer than someone who retires later.
Delaying your retirement could make a big difference in your monthly payout. For instance, if you wait until age 70 to retire when your FRA is 66, you could receive 32 percent higher benefits.
Maximum Social Security Benefits for Highest-Income Earners
The highest payout for high-income earners in 2022 was $4,194 each month. This amount was awarded to individuals who averaged $147,000 in their 35 years of work. Most of these beneficiaries also waited until the age of 70 to claim their benefits.
How to Increase Income for Social Security Benefits
Promotions and pay raises can increase your income and improve your social security benefits. Here are some ideas for increasing your income each year if you are not able to achieve a pay raise or promotion:
- Getting a side business or job
- Consulting: Experience and/or education in a particular field could qualify you to offer consulting services to businesses or organizations after work or online.
- Online Business: Online businesses could include an e-commerce store, affiliate marketing programs, drop-shipping, SEO, or content creation.
- Renting out a room: Renting a room to students or young professionals could increase your monthly income. Starting an Airbnb or VRBO could also accommodate visitors looking for short stays in your area.
- Teaching or Tutoring: Specialists can offer teaching coaching, or tutoring services online or after work. It’s also possible to create and sell courses online to increase income.
- Pet-sitting or dog-walking: Offering dog-walking or pet-sitting services after work or on weekends could earn you extra money. You can even employ others to help you run this service during working hours.
- Freelancing: Freelance opportunities are available in many fields including graphic design, digital marketing, web development, and app development. You can use your skills to earn freelance income after your working hours.
- Personal training: There’s a high demand for personal trainers, which makes this a lucrative opportunity. It’s an ideal side job with flexible hours to work around your schedule.
- Investments: The standard stock market is one way to invest. Stock options can create passive income, but you can also invest in real estate, annuities, or a business.
- Real estate: Investing in real estate could yield a steady income with little involvement and is considered one of the best investments if you can manage maintenance and upkeep for a property.
- Starting a business: Entrepreneurs can earn extra income by running a business independently or employing others to do it. This can include selling a service or product.
- Investing in annuities: Annuity investments can also create larger annual earnings. This investment involves paying into an insurance fund and receiving the money back in periodic payments. Investing in any way can result in profits and losses, and it’s important to seek professional financial advice before diving into the world of investments to help you increase your chances of making a profit and reduce the risk of losses.
There aren’t many people earning the maximum monthly social security payout. Review your income statements and forecasted payment trends. Is there something more you can do to maximize your earnings? Start planning today for your future.
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