Jul 13, 2024
Social Security is an important piece of the retirement puzzle, particularly for middle-class retirees who count on the safety net to supplement their post-career income.
But if you see Social Security as an income centerpiece, not just icing on the cake, a closer look at the numbers may prompt you to think again.
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Knowing how much Social Security income you can expect is key to planning your post-paycheck years.
What the average middle-class retiree collects
U.S. Census Bureau data from 2022 shows the national middle-class income range is between $49,271 and $147,828 — a span heavily influenced by location and cost-of-living considerations.
The bureau says the median household income in the U.S. that year was $74,580. A 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 — or $22,428 a year. (This figure was reached using the AARP’s Social Security calculator.)
Presuming the retiree has no savings and would rely on Social Security alone, that’s dangerously near the U.S. Department of Health and Human Services’ 2024 poverty line ($15,060) for one person. This is no outlier scenario: The AARP says one in five Americans over 50 have nothing saved for retirement.
Social Security benefits vary greatly but generally depend on how long one is willing to defer their benefit. Planning for a retirement that doesn’t count on Social Security, some argue, makes sense given persistent questions about the safety net’s sustainability.
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Getting more from Social Security
Getting the most from Social Security comes down to strategy, forethought and planning — along with a decent understanding of how the system works. Here are several strategies middle-class retirees can employ to increase their benefits:
Delay claiming benefits. While starting your Social Security draw early may make sense in some scenarios, the most effective way to increase your monthly check is to delay the benefit.
While retirees can start receiving benefits as early as age 62, doing so results in a reduced monthly benefit. Each year you wait, up until age 70, significantly increases the benefit amount.
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Let’s consider the previous hypothetical 55-year-old middle-class worker who’s planning to take their benefit ($1,869) at age 62. Using AARP’s calculator, waiting on benefits until age 65 would increase the monthly check to $2,314. Waiting until 67: $2,670. Waiting until 70: $3,311.
Maximize earnings. Social Security benefits are calculated based on the highest 35 years of earnings. Pursuing higher salaries during your career is a no-brainer, but Social Security’s benefit calculations are important to understanding and planning for your monthly benefit.
Understand spousal benefits. Married couples have additional strategies to consider. A spouse can claim benefits based on their partner’s earning record, which can be up to 50% of the higher-earning spouse’s benefit. That’s particularly beneficial if one spouse had significantly lower earnings. Additionally, widows and widowers can claim survivor benefits, which can provide a higher benefit amount.
Account for inflation adjustments. Social Security benefits are adjusted annually for inflation through cost-of-living adjustments (COLA). Anticipating that benefits will increase with inflation can provide some financial security against rising living costs.
Consider the tax consequences. Social Security benefits can be taxable depending on the retiree’s total income. It’s essential to understand how other sources of income, such as pensions or investment withdrawals, impact the taxability of Social Security benefits. Proper tax planning can help minimize Uncle Sam’s bite of your money.
Explore other income streams. While maximizing Social Security is important, it should be part of a broader retirement strategy. Middle-class retirees should consider other sources of income, such as part-time work, rental income, or investments, to supplement their Social Security benefits.
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Chris Clark is a Kansas City–based freelance contributor for Moneywise, where he writes about the real financial choices facing everyday Americans—from saving for retirement to navigating housing and debt.
