(Sam Swenson, CFA, CPA)
Obtaining the maximum Social Security benefit is no easy task, which is why only a small percentage of retirees actually receive it. On the one hand, the steps to earn monthly checks of $4,194 are concrete and mathematically driven. On the other hand, you should also be lucky enough to work consistently for several decades and earn quite a bit along the way.
Here, we’ll walk you through what you need to do to be eligible for the highest monthly Social Security checks.
Earn Social Security minimum wage basis for 35 years
Social security is calculated basically the same as an insurance product. That is, the amount you pay to the system during your working career will directly affect the amount you receive later when claiming benefits.
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That threshold has risen steadily over the past 80 years, rising from a mere $3,000 in 1935 to $147,000 in 2022. You will have to earn at least this amount and pay Social Security tax on it during your 35 highest earning years.
The 35 years of earnings do not have to be consecutive. That means you can work for 40 years, not meet the Social Security threshold in five of them, and still log maximum Social Security earnings in the other 35.
In short, the more you put in, the more you get later.
Wait to claim benefits until you are 70 years old
By postponing your Social Security claim until age 70, you’re allowing your potential monthly benefit to build up. Retirees claiming benefits at the age of 62 will receive only partial benefits, while those who wait until age 67 – full retirement age (FRA) – will receive exactly what they are entitled to receive, but no more.
Once you’ve claimed Social Security, you’ll receive a monthly check until your death (unless you decide to reverse your decision within a year of your first claim.) An earlier claim will reduce the monthly benefit amount as it is expected to be paid out over a longer period of time, while a later claim will increase the monthly benefit amount.
If you are in good health and can afford to wait, you will increase your monthly check by 8% for each year you delay your claim. Remember: To actually receive the maximum Social Security benefit, you must have earned the maximum Social Security salary base for 35 years and delay the filing of your claim for benefits until the age of 70.
Putting Social Security in Perspective
According to the Social Security Administration (SSA), only 6% of workers earn the maximum taxable Social Security threshold in a given year. Earning more than the salary base and doing so for 35 years represents an even smaller minority. If you managed to do this and are able to wait until 70 years to file benefits, consider yourself very lucky.
The reality is that the decision to take Social Security is often complex, as it encompasses both economic and non-financial considerations. Try not to feel too much pressure to qualify for the maximum benefit, as it is an extremely elusive goal and can be affected by broader issues such as health or family dynamics. Instead, consider pursuing a fulfilling career that pays well enough and decide on Social Security later in life.
Do you get the maximum monthly check?
Although a minority of people actually receive a monthly check for $4,194, it’s certainly possible to be one of those people. You must make sure to earn at least the maximum taxable Social Security salary base for 35 years, and in addition, you must delay the claim for benefits until the age of 70.
Think about focusing on a well-paid career that you find stimulating while keeping an eye on what it means for the future. If you’re lucky enough to be in good health well into your 60s, you may be in the conversation about notching the highest monthly benefit when your 70th birthday rolls around.
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