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How to Beat the Average $1,565 Monthly Social Security Benefit
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How to Beat the Average $1,565 Monthly Social Security Benefit

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How to Beat the Average $1,565 Monthly Social Security Benefit

Many people are shocked to learn that Social Security is not designed to replace their pre-retirement income in full. Rather, those benefits will only replace about 40% of wages for typical earners.

In fact, the average Social Security recipient today collects $1,565 a month. Coupled with generous withdrawals from an IRA or 401(k) plan, that could make for a comfortable lifestyle. But many seniors get the bulk of their income from Social Security, and if you plan to do the same, you'll want to do what you can to score a higher benefit. Here's how to pull that off.

Image source: Getty Images.

1. Earn an above-average wage

Your Social Security benefits are calculated based on your specific wage history -- namely, the amount of money you're paid during your 35 most profitable years in the labor force. If your average income throughout your career is $80,000 a year, and another person's average income is $40,000, your monthly benefit will be higher.

If you want to come away with a more generous Social Security benefit than the typical senior, then you'll need to out-earn the typical senior. It's that simple. And you can achieve that goal in a few ways.

First, you can work on boosting your job skills so you're more likely to land promotions that come with raises. Second, you can pick up a side hustle or start a small business that lets you earn income on top of your regular paycheck. Secondary earnings count for Social Security purposes, and so the more of an effort you make to raise your total income, the higher a benefit you may be in line for.

2. Extend your career once your earnings peak

It may be the case that you end up earning your highest salary on record at the very end of your career. And in that case, working longer could lead to a higher benefit.

We just learned that Social Security takes your 35 highest years of wages into account when determining your monthly retirement benefit. Let's imagine you're currently earning $100,000 a year, but your lowest income on record within those 35 years is a $30,000 salary. If you work another year at a $100,000 salary, that number will replace the $30,000 salary in that formula. The result? A higher benefit for you.

3. Claim benefits at 70 (but not beyond)

Though you can sign up for Social Security as early as age 62, you won't be eligible for your full monthly benefit until you reach full retirement age, or FRA. FRA falls between the ages of 66 and 67, depending on your year of birth.

Just as you can claim benefits before FRA, so too can you delay your filing beyond FRA. For each year you do, your monthly benefit will grow 8%.

Once you turn 70, you can no longer accrue the delayed retirement credits that cause your benefits to grow. And for this reason, delaying your filing beyond that point makes little sense. Quite the contrary -- wait too long to sign up for Social Security, and you could end up losing out on money you should've collected.

What can a larger benefit do for you?

People who are motivated to grow their Social Security benefits often imagine themselves using that money for travel and leisure. But in reality, you might need a higher benefit just to cover your basic expenses.

Some seniors wind up spending almost as much money during retirement as they do during their working years. And if you end up with a lot of health issues, you could end up spending a huge chunk of your benefits on medical care alone.

That's why it's really important to aim for a Social Security check that's higher than the average. Unlike your savings, which you could deplete in your lifetime, Social Security is set up to pay you for life. And so the higher a monthly benefit you start out with, the more financial security you'll enjoy throughout your retirement.

The $16,728 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

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