What is the maximum Social Security benefit?

What is the maximum Social Security benefit – When it comes to retirement planning, one of the key questions is how much Social Security can pay you? In January 2024, you can receive $3,822 per month as your maximum Social Security benefit at full retirement age. However, that’s just the tip of the iceberg, because the real maximum benefits are much higher – and here’s how to reach them.

The maximum Social Security check

The maximum Social Security benefit you receive depends significantly on your age and your contributions to the program.

You can claim $2,710 per month as your maximum benefit if you file at age 62 – the youngest possible age.
The maximum retirement benefit you can receive is $3,822 per month if you file between 66 and 67.
A maximum benefit of $4,873 per month is available to you if you file when you reach 70, the age at which extra benefits stop accruing.

Benefits can be reduced by as much as 30 percent for those filing at age 62. For each year after full retirement age that you delay filing, benefits increase by 8 percent.

Compared to these maximum benefits, the average Social Security benefit is quite a bit lower – about $1,706 per month in August 2023, which is less than half the maximum benefit at full retirement age in 2024.

Social Security may give you a larger monthly benefit if you wait longer to file, but it may not give you the largest lifetime payout depending on how long you live. The best time for you to file for Social Security benefits depends on your likely breakeven age.

What are the calculations for Social Security benefits?

A complicated formula is used by Social Security to calculate your primary insurance amount (PIA) – that is, your benefit upon reaching full retirement age.

Using your 35 highest-earning years after reaching age 21, Social Security calculates your average indexed monthly earnings. Typically, you receive credit for only earnings up to the Social Security wage base, which is the maximum amount of income on which Social Security taxes you. In 2024, the Social Security wage base will increase from $160,200 to $168,600.

Social Security taxes are paid by employees and their employers up to the wage base; self-employed people pay both halves.

For each year that you lack 35 years of earnings, Social Security will subtract a zero from your average monthly earnings.

As a result of these high-earning years, your average indexed monthly earnings are calculated, and Social Security applies a graduated formula based on these earnings to determine your actual retirement payment.

The full details can be found in this article, followed by an example taken from real life.

Social Security Changes Announced for 2025 – Retirees Should Prepare

How to maximize your Social Security benefit

Social Security’s formula above and other rules provide you with a few key ways to maximize your benefits:

The Social Security wage base is the maximum you can earn in a given year, and you get credit for more earnings, raising your average monthly earnings.
Increase your average earnings by adding more high-earning years. In figuring your benefit, your 35 highest-earning years are taken into consideration, so working later in life, when you are more likely to earn more, may push out lower-earning years when you were younger or even fill in years in which you would otherwise not make any or insufficient money.
When you file before full retirement age, your benefit will be reduced substantially. If you wait until age 70 to file, your benefit will increase significantly.

When it comes to Social Security, you typically don’t get a second chance, but in two cases, you might be able to get a higher payout.

For each month your benefits are suspended, you’ll earn credits. If you took benefits before full retirement age and are under 70, you can suspend your benefits and earn credits.
Your benefit can be withdrawn if you haven’t filed a withdrawal request before and have taken benefits less than a year ago. However, you will have to repay any funds you have received.

Getting the most from Social Security means exploring all the options available to you. You have many levers to pull.

What is the maximum Social Security benefit Conclusion

What is the maximum Social Security benefit – Getting the maximum Social Security benefit requires earning a high level of income over an extended period of time, a feat that very few people achieve, but even people without high incomes can make smart moves, like delaying filing for benefits, to improve their payouts.