If you’re pondering your retirement age, you might think 65 is the typical benchmark. Yet, the reality for many Americans is that the average retirement age hovers around 63.
Imagine you’ve decided to work until that 65-year milestone to manage today’s skyrocketing living costs. How much are your monthly Social Security payments likely to be by then? That’s a big question.
What is the average Social Security check for a 65-year-old?
According to the Social Security Administration, the average monthly benefit for a 65-year-old was about $1,611 as of late last year. With a cost-of-living adjustment of around 2.5%, that figure rises to roughly $1,651 this month.
This average is quite broad. While some individuals receive upwards of $4,000 a month, others see less than $1,000. Such disparities raise key questions about how to boost these numbers — and it’s possible to do so.
How can I increase my Social Security benefits?
First off, those 65-year-olds who start collecting Social Security benefits early are likely receiving a reduced amount because they aren’t waiting for their full retirement age—often set at 67 for individuals born after 1960, gradually adjusting back to 66 for those born earlier.
The effects of claiming early can be significant. If someone takes benefits just two years sooner, they might see their monthly payment decrease by up to 13%. For the average recipient, this could mean sacrificing over $200 per month by not waiting.
On the other hand, delaying benefits until 70 can lead to an increase of about 25% in monthly payments, translating to an extra $500 monthly compared to filing at the official retirement age. That’s not a minor bump!
Is it worth working past 65?
Continuing to work even just a few more years after turning 65 can yield various benefits, especially when it comes to how the Social Security Administration calculates your retirement payments.
Most people get that higher earnings mean bigger future benefits due to FICA tax contributions. However, it’s worth noting that the program accounts for earnings from a maximum of 35 years, even if you work longer. If you end up working fewer than 35 years, that won’t disqualify you. Instead, the SSA will simply label missing wage years as zero income.
If you’re in your 60s and still working, chances are you’re making more now than you did in your 20s, thanks to inflation adjustments. So, replacing lower early earnings with a few higher-earning years could increase your monthly payments significantly.
Several other important considerations
It’s crucial to think about a couple of related factors, too.
While financial comfort is vital for reducing stress, it’s just one piece of the puzzle. Health and spending time with loved ones matter, too. If after careful consideration you feel claiming Social Security at 65 is the right move, then… well, that’s your decision. For most, that equates to monthly payments around $1,600.
If you’re making a list of essential points, keep in mind that Social Security wasn’t meant to be your only retirement income stream. The program is designed to replace about 40% of pre-retirement earnings, meaning you’ll need other sources, such as Individual Retirement Accounts, to fill the gap.
In short, working a few additional years can enhance your IRA contributions while also boosting your Social Security payments.
