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Small Steps to Boost Your Retirement Income

October 2019

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

One of the most powerful ways that people can increase their income in retirement is to maximize their Social Security benefits. Below are five strategies to earn a higher monthly payment:

Earn a Higher Income: The more workers earn during their career from jobs and/or self-employment, the larger their Social Security payments will be. Higher incomes often require additional college degrees or training, increased work hours, and/or managerial responsibilities.

Work at Least 35 Years: Social Security benefits are calculated on 35 years of career earnings. Retirees who are short of this mark will have $0 averaged into their benefit calculation for years without earned income.

Work Until Full Retirement Age: Full retirement age (FRA) is 66 for people born from 1943 to 1954 and 67 for those born in 1960 or later. In between these two dates, FRA gradually increases in two-month intervals (e.g., 66 and 6 months if born in 1957). Benefits can be claimed before full retirement age, as early as age 62, but they are permanently reduced.

Consider Delayed Retirement Credits: Social Security benefits increase about 8% a year if benefits are delayed beyond FRA up until age 70. After age 70, there is no financial advantage for waiting any longer. Key factors to consider are financial need, health status, amount of retirement savings, and plans to work after retirement.

Plan Jointly With a Spouse:A common recommendation is for the lower-earning spouse to claim benefits at FRA and the higher earn to delay until age 70 to increase the amount that both spouses will eventually receive. For more information about Social Security benefit claiming, visit

In addition to earning a higher Social Security benefit (e.g., by working longer and delaying benefits), one of the most powerful ways that people can increase their income in retirement is to increase their savings in tax-deferred retirement savings plans. Below are four strategies to boost your savings:

Save Until It Hurts:This means save as much as you can until savings starts to pinch your cash flow. In 2018, workers under age 50 can defer federal income tax on up to $18,500 in a 401(k) or similar employer tax-deferred retirement savings plan. Workers age 50 and over can contribute up to $24,500 with catch-up contributions.

Save Automatically:Some employers enroll workers in 401(k)s when they are first hired and even "auto-escalate" (read: gradually increase) the amount of their workers' pay that is saved over time. Others require workers to elect to have automatic retirement savings contributions deducted from their pay.

Earn the Maximum Employer Match:Save at least the maximum amount that your employer will match (e.g. 6% of pay). This is "free money" that should not be left on the table. A fifty-cent match for every dollar saved is an automatic 50% return- risk- free and tax-deferred.

Make Wise Investment Choices:Select investments with low expense ratios and good long-term performance. Many investors also value simplicity and select index funds that track market indices and target-date funds that gradually become more conservative over time and hold less stock.