Social Security is a complex system of payments and navigating it is hard. Most people close their eyes and hope for the best when it comes to how much they will be getting in benefits, but that is a bad strategy if you wish to plan your future accurately. Thise who count on this benefit to make ends meet post working life need to be especially careful to plan accurately, as benefits are not meant to replace income.

Considering that, according to the U.S. Census Bureau data from 2022, shows the national middle-class income range is between $49,271 and $147,828 and the median household income that year was $74,580, the average 55-year-old earning that amount today and planning to take Social Security at age 62 would get an estimated monthly benefit of about $1,869 a month. This translates to $22,428 a year.

It sounds great as long as the retiree in question has other savings, but if they rely on Social Security alone that would not be enough to maintain a good standard of living in most parts of the country, especially when U.S. Department of Health and Human Services’ sets the 2024 poverty line at $15,060 for one person.

All is not lost for those who are still in the workforce and can afford to plan a bit better, there are several strategies to increase Social Security benefits.

Delay claiming Social Security benefits

Retiring early seems like a dream but can quicky become a nightmare. Retiring and claiming benefits at 62 (the earliest possible) is not a great idea for most people. It results in reduced benefits and more likely than not, increased medical costs as Medicare kicks in at age 65. Waiting until 70 to claim benefits will get you the best outcome, so in order to hold out, build your retirement funds and your savings or consider a less stressful but still gainful employment.

Explore other investments and savings vehicles

In that same vein, consider diversifying your investment portfolio and maybe take a risk with a portion of money you are comfortable losing. Maximizing Social Security benefits is important, but considering their limitations, doing so should be part of a broader retirement strategy. Middle-class retirees should also consider other sources of income, such as part-time work, rental income and investments to supplement their benefits.

Consider the tax consequences

For those who only receive Social Security benefits with no other source of income, those are not taxed, but since that is not the goal, part of your benefits will likely be taxed at least federally (most states do not have Social Security taxes). Understanding how other sources of income, such as pensions or investment withdrawals, impact the taxability of your benefits will save you a lot of nasty surprises down the line. It may also help you minimize how much in taxes you have to pay by correctly planning withdrawals.

Investing

The stock market is not the only way to invest nowadays, the real estate market has always been a good place to have your money, especially if you are looking to diversify your asset portfolio. Not everyone would enjoy turning into a landlord, but if you do not want to profit form this passive income and just want to sit tight and let the place accrue value, you could always rent through an agency. They will take commission but take most of the hassle out of the transaction.

Saving

Do not neglect your savings accounts, Investing is fun, but the money is unavailable to you o demand, while having some of your funds accessible in a high yield investment account will allow for you to liberate them with a lot more ease should you need them. It will still mean a waiting period, but there are no extra taxes to pay or steps to take.

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