How to Increase Your Social Security Benefit by $1,033 Per Month

For many retirees, Social Security benefits are a crucial part of their income. Since these benefits are based on your lifetime earnings and contributions to the program, increasing them beyond the annual Cost of Living Adjustments can be challenging.

However, patience can significantly impact your benefit amount. Deciding when to claim your benefits is a complex decision influenced by your work history, financial situation, health, and responsibilities toward loved ones.

Basics of Claiming

Your decision on when to claim Social Security benefits directly affects the amount you receive each month. As of March 2024, the average monthly Social Security benefit for retired workers was $1,913.31. You can start claiming benefits as early as age 62 or delay them until age 70.

Claiming benefits at age 62 reduces your monthly payments by about 30% compared to waiting until your full retirement age (FRA), which is 67 for those born in 1960 or later. Conversely, delaying your claim past your FRA up until age 70 increases your benefit by 8% annually.

Impact of Delaying Benefits

Let’s break this down with a practical example. If you are entitled to the average benefit of $1,913.31 at an FRA of 67, claiming at age 62 would reduce your monthly payment to $1,339.32. However, if you wait until age 70, your monthly benefit would increase to $2,372.50. Therefore, by delaying your claim until age 70 instead of 62, you gain an additional $1,033 per month throughout your retirement.

Delay Claiming

The decision to delay your Social Security claim until age 70 is not straightforward and depends on various factors.

Health Considerations

If you know your health will not allow you to work past age 62, claiming benefits early might be the best option. The Social Security system allows for early claims for a reason, so use it if you need it. Continuing to work when your health is declining can have long-lasting negative consequences, making any additional income from working less beneficial.

Financial Situation

If you’re planning a new business venture, dislike your job, or simply need some income to tide you over, claiming benefits early might provide peace of mind. It can serve as a safety net while you continue working or figure out your next steps. Conversely, if you are in good health, want to keep working, have little savings, or haven’t considered stopping, delaying your claim can significantly boost your retirement income.

Financial Planning

Delaying your Social Security claim can result in a higher lifetime payout if you live longer. This is particularly beneficial if you expect to live beyond 80 years. Having more Social Security income can help minimize the risk of depleting your savings. However, it’s essential to note that even if you wait until age 70, there’s no guarantee your benefit increase will exactly be $1,033 per month—it could be more or less depending on your wage history.

Increasing your Social Security benefit by waiting to claim requires careful consideration of your health, financial needs, and long-term plans. Weighing these factors can help you make the best decision for a comfortable and secure retirement.

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