Millions of seniors rely heavily on the benefits they collect from Social Security to stay afloat during retirement. And if you expect to be in a similar boat, then you may be eager to snag as much money as you can from Social Security.
In 2023, the maximum monthly benefit Social Security will pay is $4,555. This figure will rise in 2024.
As you might imagine, the typical senior on Social Security doesn’t get anywhere close to $4,555. But if you’re hoping for that maximum monthly payday, here’s what it’ll take to get it.
Step 1: Work for at least 35 years
The monthly Social Security benefit you’re eligible for in retirement will hinge on how much you earn during your highest-paid 35 years in the workforce. It doesn’t matter if you work a total of 36 years or 52 years. It’s only your top 35 years of earnings that count.
Step 2: Earn the equivalent of the annual wage cape
Workers often grumble about having to pay into Social Security. But those taxes are what fund the program and keep it alive.
Higher earners, however, don’t automatically pay Social Security taxes on all of their income. Rather, there’s an annual wage cap used to determine how much income gets taxed for Social Security purposes.
In 2023, that cap sits at $160,200 and is rising in 2024. But to claim the maximum benefit Social Security will pay each month, your income must be equal to or above the wage cape during your 35 highest-paying years of earnings.
Step 3: Don’t sign up for Social Security until you turn 70
Once you reach full retirement age (FRA), you can claim your full Social Security benefit, based on your personal income history. (You’re allowed to file as early as age 62, but if you don’t wait until FRA, you’ll face a lifelong reduction in your benefits.)
You’re also allowed to delay your Social Security filing past FRA. For each year you do, your benefits will grow by 8%. However, this incentive runs out at age 70. So to set yourself up for the maximum monthly Social Security payday, you’ll have to wait until your 70th birthday to claim your benefits.
You probably won’t get the maximum monthly benefit
You may be able to push yourself to work for at least 35 years and wait until age 70 to sign up for Social Security. But earning a very high income for 35 years is something you have less control over. So unfortunately, even if you’re willing to make other sacrifices, like delaying retirement, to snag the maximum monthly Social Security benefit, it still may not be in the cards.
That doesn’t mean that you can’t take other steps to drum up more retirement income, though. For one thing, you can do your best to save and invest during your working years to build up a nest egg. And you may also want to invest in assets that will pay you on a regular basis in retirement — things like dividend stocks and municipal bonds.
You can also plan to work in retirement in some capacity. Doing so could be a great way to stay busy while boosting your senior paycheck.
There’s nothing wrong with trying to get as much money out of Social Security as you can. But chasing the maximum monthly benefit may not be realistic. The sooner you recognize that, the sooner you can start taking other steps to supplement those benefits and set yourself up for a comfortable retirement.