Millions of retirees depend on Social Security to supplement their income. Some people use it as extra spending money, while others rely on it to cover essential expenses like housing, food, and transportation.
The Social Security Administration offers data to help you compare your benefit to the average. In January 2024, the average monthly payment for a retired worker receiving Social Security benefits was $1,907.40.Over the course of a year, this amounts to slightly more than $23,000.
Social Security beneficiaries can expect higher monthly payments due to the annual cost-of-living adjustment (COLA). The adjustment aims to help benefits keep up with inflation. Early projections for 2025 indicate a COLA increase of 2.57%.
If this estimate is correct, the average monthly benefit of $1,919.40 would increase to about $1,968.73. However, it should be noted that this percentage is not final, and the actual adjustment may differ when officially announced.
For those not yet retired, the average monthly payment of $1,919.40 may be discouraging, especially if you hope to receive a higher benefit when it’s time to collect Social Security. Fortunately, there are strategies you can use right now to maximize your future benefit.
On the other hand, if you’ve already retired and your income is lower than expected, there are ways to stretch it further.
Ways to Increase Your Social Security Benefit
Your Social Security benefit in retirement is largely based on your earnings during working years. The Social Security Administration calculates benefits based on your 35 highest-earning years. To increase your future payout, maximize your earnings during this period.
One way to increase your earnings is to actively seek promotions or job opportunities with higher pay. Building your skill set is an excellent way to position yourself for higher pay, as employers frequently reward employees who add more value to the workplace.
Another important factor to consider is the number of years you have worked. If you haven’t yet reached 35 years of service, you might want to postpone retirement to avoid having lower- or zero-earning years factored into your benefit calculation.
Working extra years can also help replace lower-earning years with higher-paying ones, resulting in a higher monthly payout.
To maximize your Social Security benefit, consider delaying when you start collecting. The full retirement age (FRA) for individuals born in 1960 or later is 67. Delaying filing beyond FRA can increase monthly payments by 8% per year until age 70. Waiting can result in a larger check, potentially impacting your retirement income significantly.
Making the Most of the Social Security Benefit You Have
Retirees who receive less than the average monthly income of $1,919.40 may struggle to cover essential expenses, especially if Social Security is their sole source of income. In such cases, finding ways to increase your financial resources or lower your living expenses is critical.
You can supplement your Social Security income by working part-time. Many retirees have found success in the gig economy, where they can work flexible hours at their own pace. Even a small amount of extra money earned by working a few hours per week can provide a valuable financial cushion and make it easier to cover day-to-day expenses.
Another option for maximizing your benefits is to relocate to a lower-cost area. In some areas, housing, groceries, and other necessities are more affordable, resulting in a larger Social Security check. Relocating to a lower-cost location without sacrificing comfort can increase income and improve retirement security.
