When you start planning for retirement, one question that is highly likely to come to your mind is how much monthly income you will get when you retire. The answer to this is not at all straightforward, as several factors determine the amount of benefit you will get, and the benefit amount is usually different for everyone. There is, however, a maximum amount that applies to everyone, which usually changes every year. This article will discuss how to get the maximum Social Security benefits.
The maximum Social Security benefit in 2024 is $4,873 per month or $58,476 a year. It may appear a pretty hefty amount, but it is not for everyone. In fact, the maximum benefit varies by age. For instance, the maximum benefit at full retirement age in 2024 is $3,822; the maximum benefit is $2,710 for those who retire at age 62, while the max benefit is $4,873 for those who retire at age 70.
The maximum benefit amount may vary by age, but it is still achievable. To get the maximum benefit, you need to focus on three things before retirement, which are discussed below.
Following are the ways that can help you get maximum Social Security benefits:
Earn equal to or greater than the wage cap
One significant factor determining the amount of the benefit is your average lifetime earnings. So, to score the maximum benefit, you must make a lot of money. Specifically, the money you make must be equal to or more than the “wage base limit.”
The Social Security Administration (SSA) sets the wage base limit annually, which is basically the maximum income subject to the Social Security tax. In 2024, the wage cap is $168,600, up from $160,200 in 2023 and $147,000 in 2022. The money you earn more than the limit isn’t taxed for social security, nor does it count toward calculating the benefits.
Without this limit, very high earners could pocket tens of thousands of dollars in Social Security checks. It wouldn’t be wrong to say that the wage base limit is why there is a maximum benefit. So, if you have earned at least the wage base limit amount, you get very close to achieving maximum Social Security benefits.
Work for 35 years or more
The SSA doesn’t consider your lifetime earnings to calculate your Social Security benefits. Rather, the SSA considers your 35 best earning years (adjusted for inflation). This means you will have to earn equal to or above the wage base limit for at least 35 years to get maximum Social Security benefits.
If you earned less than the wage base limit in any of these 35 years, you may not be able to achieve the maximum benefits amount. You can, however, make up for it by working for more than 35 years and ensuring your earnings are equal to or above the wage base limit.
Basically, you need to ensure that you have 35 work years with earnings equal to or above the wage base limit.
Delay claiming your Social Security
The last thing you need to ensure to get maximum Social Security benefits is to delay claiming the benefit until you are 70 years old. Though you can claim benefits as early as 62 years, the benefit amount increases if you delay claiming the benefits, and the maximum benefit is available to people who earn delayed retirement credits.
The SSA uses the concept of FRA (full retirement age) to explain the relationship between age and benefits amount. The FRA is usually 66 or 67 years or somewhere in between depending on your birth year. For instance, the FRA is 67 for those born in 1960 or later.
A person is penalized with a reduction in benefits if they claim benefits before the FRA. On the other hand, retirement credits are given to persons who claim benefits after FRA. Specifically, your benefits increase by 8% each year you delay filing past full retirement age. No credit is available for claiming benefits after 70 years.
So, to get maximum Social Security benefits you not only need to maximize your earnings and work for at least 35 years, you also need to delay claiming benefits until 70 years. However, many retirees find it difficult to wait until age 70 to claim benefits. In 2022, the average retirement age in the U.S. was 61 years (up from 57 in 1991), according to Gallup.
If you really want to hold off claiming benefits, you need to start preparing for it while you are still earning. The preparation here means saving enough to support you if you retire before you claim benefits.
Final Words
So, these were the things that you need to focus on to get maximum Social Security benefits. These tasks may appear simple, but they are not. Moreover, these tasks are not always in your control. Your health, financial situation and personal factors may prevent you from completing these tasks successfully.
Nevertheless, if you start working on these tasks from today onwards, you could get close to (or even achieve) maximum Social Security benefits when you retire.
Alternatively, if you missed any of the above three measures, you could still compensate for it by strengthening your other sources of income. For instance, you can work part-time in retirement, or you can rent your home.
