The average retiree collects around $1,500 in Social Security benefits per month. This can range up or down depending on lifetime earnings, and importantly, when you decide to start taking benefits.
Inflation has thrown a wrench into Social Security benefits and how much they cover for the average American. Prices are up a whopping 6% overall in just the past 12 months alone. To put that into perspective: Inflation remained near zero for the better part of the last decade, and in less than a year, prices surged in almost every major category. In particular, grocery prices — a sector that greatly affects senior citizens living on fixed incomes — have surged upwards of 12% in some categories.
To alleviate this, next year’s cost-of-living adjustment will be 5.9% — the largest COLA in over 40 years. If you, like millions of Americans, find yourself still needing more, here are some tried-and-true strategies to get you a significant boost in your income.
The Big One — Delayed Retirement Credits
One of the most important factors in determining your Social Security benefit is timing. The earliest you can file for Social Security benefits is 62, with the latest being 70. The earlier you take benefits, the less you will receive; the longer you wait, up to age 70, the more you will receive.
Depending on your benefit amount and at which age you decide to begin distributions, you could almost double the benefits you receive each month. This is because if you wait, you can use delayed retirement credits.
Delayed retirement credits are the financial reward Social Security gives you for putting off claiming your retirement benefit, AARP explains. Credits begin to accumulate the month you hit your full retirement age (which is 66 and 4 months for those born in 1956 and rises gradually to 67 for people born in 1960 and later.)
For each month from your full retirement age until age 70 that you postpone filing for benefits, the Social Security Administration increases your eventual benefit by about two-thirds of 1% — a total of 8% for each year you wait. This means retirees who reach full retirement age at 67 but delay claiming until 70 will get an extra 24% tacked on to their monthly benefit.
The credits accrue through age 69 but work somewhat in the reverse if you decide to take benefits early.
According to the SSA, “if a worker begins receiving benefits before his/her normal or full retirement age, the worker will receive a reduced benefit.” It adds that a worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30%.
Assuming an average benefit amount of $1,500, this means your check could now be reduced to $1,050 if you retire at 62. Should you wait until 70, that check will be around $1,888, assuming average benefit and 8% year-over-year accrual beginning at full retirement age.
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This article originally appeared on GOBankingRates.com: Social Security: How to Boost Your Benefit by $800