Millions of retirees rely on Social Security for their monthly income. Some people use these payments to complement their spending money, while others rely on them to meet basic living expenses such as housing, transportation, and food.
If you are already receiving Social Security benefits or plan to receive them in the future, you may be curious how your monthly payout compares to that of the average retiree. Fortunately, the Social Security Administration (SSA) offers some insight into this.
As of July 2024, the average monthly benefit for a retired employee was $1,919.40. On an annual basis, this amounts to slightly over $23,000. This figure shows the average Social Security income for retirees, while many receive more or less than this depending on a variety of circumstances.
Beneficiaries should expect their benefits to increase somewhat in 2025 because to the yearly cost-of-living adjustment (COLA). Current estimates show that the adjustment will be approximately 2.57%. If this estimate is correct, the average monthly benefit would increase from $1,919.40 to nearly $1,968.73. However, this amount is simply an estimate; the real proportion may change by the time the adjustment is completed.
If you’re still working and the average benefit of $1,919.40 is lower than expected, you may be wondering if there’s anything you can do to boost your future Social Security payments. Fortunately, there are various techniques for maximising your benefits. Even if you are already retired and earning less than this amount, there are methods to make the most of your present income and manage your money better.
Strategies for Increasing Your Social Security Benefit
The amount of Social Security you get in retirement is exactly proportional to your lifetime earnings, specifically the income earned during your 35 highest-paid years of employment. If you want a greater monthly pension, focussing on boosting your income throughout your working years can make a big difference. This could include seeking promotions, switching employment for higher salary, or improving your abilities through training and development programs. Many employers provide mentorship programs that can help you grow your career and potentially earn more money.
Another important element to consider is that you work for the complete 35 years. Social Security calculates your benefits using your highest 35 years of earnings. If you haven’t worked for 35 years, zeros will be added to compensate for the missing years, lowering your average and, as a result, your benefits. If you’re nearing retirement but haven’t hit 35 working years, you might want to postpone your retirement to secure a more favourable computation.
Additionally, extending the age at which you claim Social Security can result in a higher monthly benefit. Anyone born in 1960 or later reaches full retirement age (FRA) at age 67. However, for each year you delay claiming benefits beyond your FRA, your payment rises by 8% until you reach age 70. This implies that if you can postpone claiming benefits, you can increase the amount you receive each month, maximising your total retirement income.
Maximising the Benefits You Currently Receive
For seniors who are currently receiving Social Security payments that are less than the average of $1,919.40, it might be difficult to fund basic living expenditures, especially if additional sources of income are restricted or nonexistent. In this instance, you can use a few ways to stretch your present Social Security income farther.
Part-time job is one possibility for supplementing your Social Security income. Joining the gig economy, for example, allows you to work flexible hours while earning extra money to help pay your bills and other expenditures. Even just a few hours each week can make a major difference in your finances without requiring a large time commitment.
It’s also worth mentioning that retirees can work while collecting Social Security. However, if you have not yet achieved full retirement age, you should be aware of the earnings-test limits. If your income surpasses a specific threshold, your Social Security payments may be temporarily decreased, so you should be informed of the applicable limits.
Another option for stretching your benefits is to relocate to a more affordable place. Moving to a lower-cost area can help you save money on rent, groceries, and other necessities, allowing your Social Security income to cover more of your expenses. When exploring new destinations, thorough research is essential, but locating an affordable place to reside may benefit your financial circumstances.
