The high hurdle means that most retirees receive less than the maximum benefit.
The wealthiest Social Security recipients will earn a record $4,873 a month in take-home pay in 2024, up from $4,555 a month last year. This kind of money, especially when combined with personal savings, can support a fairly comfortable retirement.
However, requesting a check of this size is extremely rare. In fact, as of February 2024, the average benefit is only about $1,911 per month.
It all goes back to how the Social Security benefit formula works. Below, we explain how the government calculates benefits, why most people receive far less than the maximum amount, and what you can do to increase your check.
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What must I do to get the maximum Social Security benefits?
There are three boxes you need to check to claim maximum Social Security benefits. First, you must have worked for at least 35 years.
The government takes into account your highest 35 years of income when calculating your benefits. If his years of service are less than 35 years, the formula zeros in for years with no income, and he only has one year with zero income, which excludes the maximum Social Security benefit. is enough.
But the second box is what throws most people off. You must have earned the maximum income subject to Social Security taxes (also known as contribution and benefit basis) for at least 35 years. In 2024, you will earn more than $168,600.
This number has been rising year by year, from $117,000 a decade ago to $76,200 at the beginning of this century. However, at that time, these were still high hurdles to clear, and if you earn less than the contribution and benefit standards even for a single year, you will not be able to receive the maximum benefits again.
Finally, you must wait until age 70 to apply for Social Security. This is when the accumulation of delayed retirement credits qualifies you to receive the maximum benefit each month. Note that this is different from Full Retirement Age (FRA), which is the age at which you become eligible for full benefits based on your work history. You can sign up at FRA or at age 62, but you won’t qualify for the maximum check in these scenarios.
How can you get the most out of your Social Security check?
High income requirements may make it impossible for most people to receive the $4,873 benefit, but you can use the information above to make the most of your check.
- If possible, aim to work for at least 35 years. This prevents your benefits from being reduced due to a year of zero income.
- Do what you can to increase your income now. If you’re below the maximum income subject to Social Security taxes, you can increase your check in retirement by doing everything you can to increase your taxable income.
- Choose the Social Security claiming age that’s right for you: Think about what makes sense based on your health and financial situation.
While the first two are self-explanatory, choosing the best Social Security claiming age can be difficult. Generally, most people will benefit the most during their lifetime by delaying taking Social Security until age 70. However, this is not always possible.
Some people don’t expect to live past 70, but they can receive more money by claiming early. Some people may want to delay taking Social Security, but they won’t be able to work or afford to cover their living expenses during that time. In this case, claiming early may be essential to staying out of debt, even if it means settling for a lower lifetime benefit.
These are personal factors you should consider when deciding when to sign up. Consider several options and plan the application age that seems most reasonable at this time. You can always pivot if circumstances change in the future.
Finally, keep an eye out for changes to the Social Security program. The government is likely to make some changes in the coming years to address Social Security’s funding crisis, and this could also affect your claims strategy.
