In 2024, your Social Security benefits will be capped at $4,873 per month, which is quite a large amount of money to receive from the government each month.
Unfortunately, it’s highly unlikely that most retirees will receive anything close to that amount. In fact, there are three main reasons why your own Social Security check will probably be much lower than your maximum monthly check.
1. You need to earn a lot of money to get the most out of the perks
of social security Benefit plans are designed to replace about 40% of pre-retirement income for most workers, and even less for high-income earners. So it’s clear that your salary would need to be much higher than that amount over the course of your career to ultimately earn $4,873 per month in benefits.
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Specifically, you needed to earn the equivalent of $168,600 over your career, adjusted for inflation. Wondering why that number? This is the 2024 wage base limit, and the wage base limit changes over time depending on wage growth.
In the first place, the upper limit on social security benefits is determined by wage-based restrictions. To prevent people from receiving tens of thousands of dollars a month in Social Security benefits, there is a cap on the amount of wages that is included in the benefit formula.
If you earn more than the wage base limit for each year of work included in your benefit calculation, you will receive the highest possible average wage. This is the number Social Security uses to determine benefits, so reaching the maximum average wage is a requirement to get the biggest payout possible.
Unfortunately, only about 6% of workers earn more than the wage base limit each year. So 94% are not. If you’ve been in that 94% for most of your career, the biggest gains are out of reach.
2. We need to maximize our wages for 35 years.
The benefit formula used to calculate Social Security does more than just take all of your wages for each year and divide by the number of years of service to calculate your average wage. Instead, the inflation-adjusted wages from his 35 years of earning the most are used.
Therefore, the maximum possible average benefit is only available to those who have earned at least the wage-based limit for 35 years. This does not mean that every year of your career has to be a high income. Only 35 of them. Even if you worked for 40 years and earned very little for 5 of those years, you can still receive the maximum benefit if your income equals or exceeds the wage threshold limit for the remaining 35 years.
Conversely, if even one year of income is included in the calculation below the wage-based limit, the maximum benefit amount will not be calculated.
3. You need to claim benefits when you turn 70
Finally, there is one more reason why you may not be getting the maximum benefits. That’s the fact that he will have to wait until age 70 to claim his first Social Security check.
Even if you have been earning well for 35 years, this is simply the highest possible income. standard Social security benefits. To maximize your monthly income, you should earn as much delayed retirement benefits as possible to increase your standard benefits to the maximum.
Late retirement credits are earned each time you wait beyond your retirement benefits. full retirement age How to get a social security check. You can receive it until age 70, so you’ll have to wait until then to claim your first retirement benefit. And this is not very common. That’s because it’s too long for most people to work, and many have to claim benefits at retirement to get enough support.
Don’t be discouraged if you probably won’t get the maximum benefits. You can increase your check by postponing your claims and taking steps to increase your income while on active duty. However, he should realize that his Social Security check will probably be much less than $4,873 and plan accordingly when setting retirement savings goals.
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