The maximum Social Security benefit in 2022 is $4,194 per month if retiring at age 70. The max Social Security benefit per month is $3,345 at full retirement at age; $2,364 for retirement at age 62. Show
How is the maximum Social Security benefit calculated?The amount you get from Social Security every month depends on the size of your lifetime earnings and your retirement age. The more you earn and the longer you wait to claim Social Security, the bigger the monthly check. The Social Security Administration looks at how much money you earned over time and adjusts those earnings for inflation. Up to 35 of your highest-earning years, stopping at age 60, are considered to calculate your average monthly earnings — this is called your average indexed monthly earnings (AIME). After that, a formula is applied that gives you a percentage of those lifelong earnings as your benefit payment. The payment you receive if you wait until you reach normal retirement age is called your primary insurance amount. Essentially, the income you earned in, say, 1993 is revised to reflect what that wage would be nowadays before Social Security determines your benefit. (You're also eligible for cost-of-living benefit increases starting the year you turn 62, even if you don't take your benefits until later.) How to maximize your retirement incomeSocial Security alone likely won’t be enough money for many people when they retire, which is one reason that saving for retirement is so important. You can boost your retirement income by putting money into tax-advantaged savings vehicles such as an individual retirement account. Advertisement
How an IRA worksAn individual retirement account (IRA) is a kind of tax-deferred or tax-free retirement account that you can get at many financial institutions. You can use it to invest in stocks, bonds and other assets. Two of the most popular types of accounts — the traditional and the Roth — allow you to add $6,000 per year ($7,000 if you’re 50 or older), even if you’re also contributing to a workplace savings plan such as a 401(k). With a traditional IRA, you may be able to deduct your contributions, which can reduce your tax bill in the year you contribute. With a Roth IRA, you can't deduct your contributions, but your investments grow tax-free and you can withdraw money tax-free in retirement.
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mphillips007 / Getty Images/iStockphoto Social Security retirement benefits are not the same for all retirees. The amount of your monthly benefit can vary greatly based on a number of different factors, from when you decide to claim Social Security to how much you earned during your career. However, there is a maximum allowable Social Security retirement benefit. Ironically, the highest payout is reserved for those who arguably need it
the least. If you’re aiming to snag this top payout, here’s what you’ll need to do. Social Security Schedule: When the First COLA Checks Will Arrive in
January 2022 For 2021, the top Social Security payout is $3,895 per month. As you’ll see below, attaining this maximum benefit is not easy, and is based on a combination of your lifelong earnings record and your age when you claim your retirement benefit. The good news is that you have at least some control over these factors, meaning you have the ability to boost your future Social Security benefit. Find Out More:
The Biggest Problems Facing Social Security Although the top Social Security payout is actually
rather sizable, the average benefit is much less. As of 2021, the average retirement payout amounted to just $1,517.67. That’s just $18,212.04 per year. Seeing as a full-time minimum wage worker pulls in about $30,000 per year, the average Social Security benefit won’t get most retirees very far. As that $1,517.67 figure is just an average, it also means that many retirees earn payouts below that level. See:
All the States That Don’t Tax Social Security Does Your Age Affect Your Social Security Payout?Age is absolutely a key factor in the size of your Social Security payout. The top payout of $3,895 is only available to those who delay claiming their benefit as late as possible, which is age 70. If you want to claim Social Security at 62 instead, which is the earliest allowable age, the maximum Social Security benefit drops to $2,324. If you retire any time between age 62 and age 70, your benefit amount will be adjusted accordingly between these two extremes. Important: Jaw-Dropping Stats About the State of Retirement in America How Much Do You Have To Earn To Claim the Maximum Social Security Benefit?Social Security taxes phase out once you reach the maximum wage base for a given year. If you earn above that maximum, you won’t have to pay any more Social Security tax for that year. However, you also won’t earn any additional credits for your Social Security retirement benefit. To qualify for the maximum Social Security payout, you’ve got to be a top earner. In fact, you’ll have to earn at least the maximum wage base for at least 35 years. For 2021, the Social Security wage base is $142,800. This number is indexed for inflation, so back in 1985, the wage base was just $39,600. Helpful: All You Need To Know About Collecting Social Security While Still Working Don’t Forget About Spousal Social Security PayoutsThe maximum Social Security payout only applies to individuals. If your spouse qualifies for their own Social Security benefit, you can add your two payouts together and jointly earn more than the maximum for a single person. But even non-working spouses qualify for a spousal benefit of up to half of the higher-earning spouse’s payout if their own benefit is less. For example, if you qualify for the maximum Social Security payout of $3,895 and your spouse’s benefit based on their own work record is just $1,200, they’ll earn more claiming the 50% spousal benefit. If you pass away, that spousal benefit will convert into a survivor’s benefit equal to 100% of your own payout, or $3,895 (indexed for inflation). Find Out: The Average Social Security Check the Year You Were Born What Moves Can You Make To Boost Your Social Security Payout?Although the computation of your Social Security benefit can be complicated, the basic principles underlying it are simple. To maximize your Social Security benefit, you’ll have to earn as much as you can — at least the Social Security wage base every year for 35 years — and you’ll have to defer claiming Social Security as long as possible, which is age 70. Most workers can’t earn at those levels for 35 years, so you may have to temper your expectations a bit when it comes to your Social Security payout. What you can do, however, is earn as much as possible, even if it falls below the Social Security wage base, and make sure that you work at least 35 years. If you want to retire after just 31 years of earning, for example, you’ll be taking zeroes in terms of your Social Security computation for four years. Working that additional four years could go a long way toward boosting your ultimate Social Security payout. More From GOBankingRates
This article originally appeared on GOBankingRates.com: Here’s the Maximum That You Can Get From Social Security
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