Social Security: How to Boost Your Benefits by $10,848 Per Year
Social security is an integral source of income for millions of retirees, and 76% of US adults say optimizing their benefits is more important than ever, according to a 2022 survey by the Nationwide Retirement Institute.
Luckily, it’s possible to increase the size of your monthly payments. And there’s one move in particular that could potentially boost your checks by more than $10,000 a year.
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How your age affects your level of benefit
The age you file for Social Security is perhaps the most important factor influencing your benefit amount.
Age 62 is the earliest age you can start, or you can apply at any age after that. Your Full Retirement Age (FRA) is the age at which you receive the full amount of pension that you are entitled to based on your earnings from work. For those born in 1960 or later, your FRA is 67 years old.
You can also delay benefits beyond your FRA, and by deferring until age 70 to file you will receive the maximum amount of benefit possible.
Delaying benefits may not be ideal (after all, few workers have want postponing retirement until later in life), but it could significantly increase your annual income.
How to increase your Social Security by $10,000 a year
According to the Social Security Administration, the average benefit level as of August 2022 is around $1,673 per month.
Assuming you have an FRA of 67 and filing at that age you would be paid $1,673 per month. If you started claiming at age 62 instead, your benefit amount would be permanently reduced by 30%, leaving you with about $1,171 a month — or $14,052 a year.
Conversely, if you defer benefits until age 70, you will receive your full benefit plus an additional 24%. That works out to around $2,075 per month or $24,900 per year. In total, that’s $904 a month (or $10,848 a year) more than you would be getting at age 62.
| Age at which you start claiming | Monthly Benefit Amount | Annual Benefit Amount |
|---|---|---|
| 62 | $1,171 | $14,052 |
| 67 | $1,673 | $20,076 |
| 70 | $2,075 | $24,900 |
When you should (and shouldn’t) delay Social Security.
Waiting until age 70 to apply for Benefits can be a fantastic way to increase your monthly income, and if your savings aren’t enough, deferring benefits could be a smart move.
This strategy might also make sense if you have reason to believe you’re going to have a longer-than-average lifespan. The longer you live, the more likely it is that your savings will eventually run out. In that case, an extra $10,000 a year in Social Security benefits could go a long way.
However, the Social Security delay isn’t for everyone. For example, if you think you have a shorter life expectancy than average, you could actually get more over your lifetime if you claim early. While each check is smaller, you will receive more payments overall compared to late payments.
Early claiming can also make sense if you are forced into early retirement due to job loss or health problems. You don’t have to apply for Social Security immediately after you retire, but if you retire at 62 and defer benefits until age 70, you risk depleting your savings too quickly.
There is no one right answer to when you should start collecting Social Security. Applying at the right age for your situation makes it easier to maximize your Social Security coverage.