Millions of retirees depend on Social Security for a monthly income. For some individuals, these payments serve as supplemental spending money, while for others, they are crucial for covering essential living costs, including housing, transportation, and food.
If you’re receiving Social Security benefits or planning to in the future, you may be wondering how your monthly payment compares to that of the average retiree. Fortunately, the Social Security Administration (SSA) provides some insight into this.
As of July 2024, the average monthly benefit for a retired worker was $1,919.40. On an annual basis, this totals just over $23,000. This amount represents the typical Social Security income for retirees, though it’s important to note that many receive more or less than this, depending on various factors.
Looking ahead to 2025, beneficiaries can expect a slight increase in their payments thanks to the annual cost-of-living adjustment (COLA).
Current estimates suggest that the adjustment could be around 2.57%. If this estimate holds, the average monthly benefit would rise from $1,919.40 to approximately $1,968.73. However, this figure is only an estimate, and the actual percentage could change by the time the adjustment is finalized.
If you’re still working and find the average benefit of $1,919.40 lower than expected, you might be wondering if there’s anything you can do to increase your future Social Security payments. Thankfully, there are several strategies to maximize your benefit. Even if you’re already retired and receiving less than this amount, there are ways to stretch your current income and manage your finances more effectively.
Strategies to Increase Your Social Security Benefit
The amount of Social Security you receive in retirement is directly tied to your lifetime earnings, specifically the income you earn during your 35 highest-paid years of work. If you’re aiming for a higher monthly benefit, focusing on increasing your income during your working years can have a significant impact. This might mean seeking promotions, switching jobs for better pay, or enhancing your skillset through training and development programs. Many employers offer mentorship programs, which can help position you for career advancement, potentially leading to higher earnings.
Another critical factor to consider is ensuring you work for a full 35 years. Social Security calculates your benefits based on your highest 35 years of earnings. If you haven’t worked for 35 years, zeros will be factored in for those missing years, which will lower your average and, consequently, your benefit. If you’re approaching retirement but haven’t reached 35 working years, you might consider delaying your retirement to ensure a more favorable calculation.
Additionally, delaying the age at which you claim Social Security can also result in a larger monthly payment. Full retirement age (FRA) is 67 for anyone born in 1960 or later. However, for every year you postpone claiming benefits beyond your FRA, your payment increases by 8%, up until you reach age 70. This means that if you’re able to delay claiming benefits, you can significantly boost the amount you receive each month, maximizing your overall retirement income.
Maximizing the Benefit You Currently Receive
For retirees who are already collecting Social Security and find their payments less than the average $1,919.40, it can be challenging to cover basic living expenses, particularly if other sources of income are limited or nonexistent. In this case, there are a few strategies you can consider to make your current Social Security payments stretch further.
One option is to supplement your Social Security income by working part-time. Joining the gig economy, for instance, allows you to work flexible hours while earning extra income to help cover bills and other expenses. Even working just a few hours a week can provide a meaningful boost to your finances, without requiring a significant time commitment.
It’s also worth noting that retirees can continue to work while receiving Social Security. However, if you haven’t yet reached full retirement age, you’ll need to keep an eye on the earnings-test limits. If your income exceeds a certain threshold, your Social Security benefits could be temporarily reduced, so it’s important to be aware of the limits that apply.
Another strategy to make your benefits stretch further is to consider relocating to a more affordable area. Moving to a location with a lower cost of living can reduce your housing, grocery, and general living expenses, allowing your Social Security payments to cover more of your needs.
Thorough research is important when exploring new locations, but finding an affordable place to live could have a positive impact on your financial situation.
