How big is the average Social Security check of a middle-class retiree? Here's how to build a a bigger nest egg so you don't have to rely on benefits

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.

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.

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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.

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.

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.

If you want to delay your benefits, you can keep building up your retirement fund using an inflation-hedging vehicle, like a gold IRA. Diversifying with assets like precious metals, which have a low correlation to stocks and bonds, can further stabilize your portfolio.

By opening a gold IRA with the help of Rosland Capital, you can combine the tax advantages of a traditional IRA with the inflation-hedging properties of gold.

As an authorized dealer for the U.S. Mint, Rosland Capital can assist you in growing your retirement savings. You can request a free information kit to learn more and see if this is the right retirement account for you.

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 share of your money.

By speaking to a financial advisor through Zoe Financial, you can get a comprehensive understanding of your financial situation, and find a trusted professional to guide you through your tax planning.

To get connected with an expert today, simply answer a few questions and Zoe Financial will match you with advisors who can help you figure out a plan.

Explore other investments and savings vehicles

While maximizing Social Security is important, it 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 Social Security benefits.

Read more: These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how

Investing

Both residential and commercial real estate have long been solid choices for investors looking to diversify and add stability to their portfolios — especially while saving for retirement. Since having a place to live is essential, real estate remains a stable, relevant asset.

Backed by world class investors like Jeff Bezos, Arrived makes it easy to fit rental and vacation properties into your investment portfolio, regardless of your income.

Arrived’s easy-to-use platform offers SEC-qualified investments and flexible investment amounts. Start by browsing a curated selection of homes, vetted for their appreciation and income potential. Once you find a property you like, choose the number of shares you want to buy.

If you’re an accredited investor, you’re also not limited to residential real estate.

For example, First National Realty Partners specializes in grocery-anchored commercial real estate properties with historically strong return potential.

FNRP has developed relationships with the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods, and provides insights into the best properties both on- and off-market.

If you’re a newer investor, it’s normal to feel overwhelmed by the prospect of getting into investing, especially if your retirement fund is riding on it. That being said, investing doesn’t have to be all that complex with platforms like Acorns which put your investments on autopilot.

Once you’ve downloaded the app and linked your bank account, Acorns will round up every purchase you make to the nearest dollar and invest the spare change into a diverse portfolio of ETFs. That way, you can work towards your savings goals a few cents at a time — without even thinking about it.

Another tactic long-hailed by wealthy investors is to diversify your investments in the private market. However this market typically requires high entry fees, making it inaccessible for the average investor.

Fortunately, Fundrise makes investing in private assets more accessible. With their platform, you can gain access to several different private funds, each calibrated for consistent growth with a minimum investment of just $10.

With Fundrise you get access to an expansive portfolio of alternative investment opportunities including real estate, private debt and venture capital.

With over two million investors and managing over $7 billion in real estate assets alone, Fundrise is an accessible way to diversify your portfolio with the potential of yielding dividends every quarter.

To get started, all you have to do is share some details about financial background, risk tolerance and investment preferences, then Fundrise will build a portfolio for you that aligns with your goals.

Saving

Saving for retirement is no small feat, but using the right savings vehicles can take a bit of the pressure off.

Using a high interest savings account like the Wealthfront Cash Account is a solid option for your retirement fund, and will give your money a chance to grow to its full potential. Wealthfront is an online brokerage offering a range of products from automated investing to cash accounts.

Their high-yield cash account offers 5.00% APY — that’s 10x the national average — making it a great option to bulk up savings. To get started, you can fund your cash account with as little as $1.

You might also consider checking out the Moneywise list of the Best High Yield Savings Accounts of 2024 to find some great options that can earn you more than the national average of 0.45% APY.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.