Here’s some bad news: The average monthly Social Security retirement benefit was recently just $1,669, or about $20,000 annually. The fact that this is an average means that plenty of people receive less — and sometimes a lot less — than that. On the other hand, those with an above-average earnings history will collect more than $1,669 — and the maximum that people are receiving these days is $4,194, which amounts to about $50,000.
Here’s what you need to do to end up with that maximum $4,194 monthly Social Security payout. There’s a good chance you can’t quite get there, but you may still be able to increase your ultimate benefits by a lot — maybe even by 24% or more!
1. Earn income for at least 35 years
To understand how to qualify for that maximum benefit, know that for each of us, our benefits are calculated based on our earnings in the 35 years in which we earned the most (adjusted for inflation). So you’ll need to have worked for at least 35 years to have a chance of collecting that $4,194 per month.
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2. Earn the maximum that counts
On top of working for (at least) 35 years, you’ll also need to have earned the maximum allowed in each of those years. The maximum is probably less than you think: For each year, there’s a maximum taxable earnings limit — an income level beyond which you’re not taxed for Social Security. That limit is $147,000 for 2022, and it tends to be raised every year.
So to qualify for that maximum payout, you’d need to earn at least $147,000 in 2022 — and at least the corresponding sum for each of the other 34 years. You probably already have at least one year with earnings below the maximum taxable earnings limit — but that alone doesn’t necessarily disqualify you. Know that for each year beyond 35 that you work, your lowest-earning year will get kicked out, leaving only the 35 years in which you earned the most.
3. Delay starting to collect your benefits
Finally, you’ll also have to delay starting to collect your benefits until age 70. Each of us has a “full retirement age” at which we can start collecting the full benefits to which we’re entitled based on our earnings history. For most of us, it’s 66 or 67. You can start collecting at 62, though, which will mean that your benefits will be reduced (but you’ll get more checks overall).
Or, if you delay starting to collect beyond your full retirement age, your benefits will increase by about 8% for each year that you do so, until age 70.
So for that maximum benefit, you’ll have to earn at least the maximum taxable earnings limit for 35 years, and then delay starting to collect your benefits until age 70. Clearly, it’s just not going to happen for most of us.
Take heart, though — because there are still ways to increase your future Social Security benefits.
Work to collect your maximum benefit
Even if it currently looks like you’ll only collect, say, $2,000 per month in Social Security benefits when you retire, the strategies above can help you increase that amount.
For starters, if you can earn more in the years ahead, such as by getting a promotion, changing to a higher-paying job, and/or taking on some side jobs, your benefits can increase. Also, if you’re earning more these days than you’ve earned in the past (on an inflation-adjusted basis), then if you can work a total of, say, 38 to 40 years you’ll kick out three to five years of low earnings.
Delaying collecting your benefits until age 70 — if you can wait that long — will also beef up your checks by a lot, maybe even 24%, if you delay from 67 to 70.
So although $4,194 may be out of reach, you may be able to add hundreds of dollars to your monthly benefit — which can make a meaningful difference in the future.
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