Here’s the Maximum Possible Social Security Benefit And How to Avoid Missing Out

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Maximizing your Social Security benefits is essential for a prosperous retirement, especially since nearly half of all retirees aged 65 and older depend on Social Security for the majority of their income, according to the Social Security Administration.

Maximum Social Security Amount at Key Ages in 2024

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Based on the age at which you apply for Social Security Benefits, here are the maximum monthly benefits

Age 62: $2,710

Your Full Retirement Age: $3,822

Age 70: $4,873

This maximum amount at age 70 assumes the individual has had a consistent income since age 22 and retired in January 2024. It also presumes that the person’s average indexed monthly earnings (AIME) throughout their career were $9,990.

Key Factors to Get the Maximum Monthly Benefits

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To maximize your Social Security benefits, you must

1. consistently earn a high income throughout your career and

2. delay claiming until age 70.

Contribute to Social Security

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To qualify for Social Security benefits, you must work in a job that contributes to Social Security. However, some state, county, and municipal employees are covered by state-funded pension plans instead.

Federal employees hired before 1984 were under the old Civil Service Retirement System, and railroad employees are covered under a separate pension system.


Need Minimum 40 Credits

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To qualify for Social Security retirement benefits, you must earn 40 work credits, equivalent to ten years of work.

You can earn up to four work credits annually, with credits earned for each $1,730 of covered earnings in 2024.

Therefore, $6,920 in covered earnings for the year will earn you the maximum of four credits.

Highest-Earning 35 Years

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When calculating your retirement benefit, the Social Security Administration (SSA) examines your earnings history, selects the 35 highest-earning years (adjusted for inflation), and averages them. This average is then used in a formula to determine your primary insurance amount (PIA).

If you do not have 35 years of earnings, the SSA adds “zero earnings” for the missing years when calculating the Primary Insurance Amount (PIA).

Your wages are indexed to account for inflation, with prior years’ wages adjusted to reflect current buying power. This adjusted figure is used to compute your average indexed monthly earnings (AIME), which forms the basis of your benefit calculation for the year.

No Extra Credit For Exceeding Contribution Base

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The SSA doesn’t include all your income in its calculation. It caps the amount counted toward Social Security each year at the “contribution and benefit base,” adjusted annually for inflation. As of 2024, this limit is set at $168,600.

If you consistently earn at or above this limit throughout your career for 35 years, you’ll qualify for the maximum Social Security benefit possible.

How Much Earnings Are Needed For Maximum Social Security Benefits

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Here are the maximum earnings for each year which define the Social Security Wage Base (SSWB). For 2024, the amount is $168,600 and is also the maximum amount that is taxed for Social Security purposes.

| Year | Earnings |
| 2024 | $168,600 |
| 2023 | $160,200 |
| 2022 | $147,000 |
| 2021 | $142,800 |
| 2020 | $137,700 |
| 2019 | $132,900 |
| 2018 | $128,400 |
| 2017 | $127,200 |
| 2016 | $118,500 |
| 2015 | $118,500 |
| 2014 | $117,000 |
| 2013 | $113,700 |
| 2012 | $110,100 |
| 2011 | $106,800 |
| 2010 | $106,800 |
| 2009 | $106,800 |
| 2008 | $102,000 |
| 2007 | $97,500 |
| 2006 | $94,200 |
| 2005 | $90,000 |
| 2004 | $87,900 |
| 2003 | $87,000 |
| 2002 | $84,900 |
| 2001 | $80,400 |
| 2000 | $76,200 |
| 1999 | $72,600 |
| 1998 | $68,400 |
| 1997 | $65,400 |
| 1996 | $62,700 |
| 1995 | $61,200 |
| 1994 | $60,600 |
| 1993 | $57,600 |
| 1992 | $55,500 |
| 1991 | $53,400 |
| 1990 | $51,300 |
| 1989 | $48,000 |
| 1988 | $45,000 |
| 1987 | $43,800 |
| 1986 | $42,000 |
| 1985 | $39,600 |
| 1984 | $37,800 |
| 1983 | $35,700 |
| 1982 | $32,400 |
| 1981 | $29,700 |
| 1980 | $25,900 |
| 1979 | $22,900 |
| 1978 | $17,700 |
| 1977 | $16,500 |
| 1976 | $15,300 |
| 1975 | $14,100 |
| 1974 | $13,200 |
| 1973 | $10,800 |


When to Claim Social Security Benefits

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Even with maximized earnings, the difference in benefits you could receive at ages 62, 67, or 70 is significant, as evident in the maximum Social Security benefits at each of these ages.

The primary insurance amount (PIA) represents the benefit you’ll receive if you claim Social Security at your full retirement age (FRA), which varies between age 66 and 67 based on your birth year.

Your Full Retirement Age (FRA) is determined by your birth year, set at age 66 for those born between 1943 and 1954. For each birth year thereafter, FRA increases by two months until it reaches age 67 for individuals born in 1960 and later.

Claiming before your full retirement age results in a reduced benefit, while claiming after increases it.

If you choose to retire before your Full Retirement Age (FRA) and start receiving benefits, your monthly benefit will be your Primary Insurance Amount (PIA), reduced by a percentage for each month you begin receiving benefits before your FRA (age 62 is the earliest possible age).

Conversely, if you delay starting benefits until after your FRA, your monthly benefit will be your PIA, increased by delayed retirement credits for each month of delay (with credits maxing out when you reach age 70).

Opting to claim benefits at 62 will yield significantly lower monthly payments compared to waiting until age 70. Conversely, claiming early means enjoying eight more years of benefit checks. To strike a balance, many retirees choose to wait until around their full retirement age to start claiming benefits.


Delaying Benefits to Maximize Monthly Benefits

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Delaying Social Security benefits not only increases monthly payments but also impacts spousal claiming strategies.

For couples, maximizing benefits might involve one spouse delaying to increase the survivor benefit available to the other.

Conversely, claiming early allows for earlier retirement and the opportunity to invest independently. While early claiming provides immediate income, it may mean lower lifetime benefits.

Importantly, Social Security benefits are inflation-protected, ensuring a stable income stream against rising costs throughout retirement. Each strategy involves trade-offs, requiring careful consideration of individual financial needs and retirement goals.

How to Get a “Do Over” for Higher Social Security Payouts

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While you typically don’t get a second chance with Social Security, there are two situations where you can effectively get a “do over” to secure a higher payout later:

1. Suspend Your Benefit: If you started benefits before full retirement age and are under 70, you can suspend your benefit to earn credits for each month it’s suspended.

2. Withdraw Your Benefit: If you began benefits less than a year ago and haven’t previously withdrawn, you can withdraw your benefit, making it as if you never filed. You will, however, need to repay any money you’ve received.

What is the Average Social Security Check Amount?

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As of January 2024, data from the Social Security Administration shows that the average monthly retirement benefit was $1,907, amounting to $22,884 annually.

For a retired couple with both spouses receiving benefits, the average monthly benefit was $3,033, totaling $36,396 per year.

How to Maximize Your Social Security Benefit

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To achieve the highest possible Social Security benefit, consider delaying the start of benefits until age 70. This strategy ensures you receive the maximum delayed retirement credits available.

Additionally, review your Average Indexed Monthly Earnings (AIME) calculation. Create a free account online on the Social Security website to review your details.

To maximize your benefit, you need to earn at least the SSWB every year for 35 years.

If you have fewer than 35 years of covered earnings, consider working a few more years to replace zero-earning years in your AIME calculation.

Even if you have more than 35 years of covered earnings with some low-earning years, working additional years at a higher salary can boost your AIME and increase your benefit amount.

How Can Couples Increase Their Social Security Benefits?

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We’ve discussed maximizing individual Social Security retirement income by delaying benefits and optimizing Average Indexed Monthly Earnings (AIME). Each spouse in a married couple can aim for the highest possible benefit by employing these strategies.

Another critical aspect of maximizing Social Security benefits is considering the total lifetime income you and your spouse could receive. This involves determining the optimal age to start benefits to maximize your combined lifetime benefits.

Additionally, if you are married, you can work to maximize your survivor benefits. Ensure that the spouse with the higher benefit delays claiming their benefit for as long as possible to guarantee that the spouse with the lower benefit will receive the highest possible survivor’s benefit.

For precise calculations, utilizing Social Security optimizing tools like Open Social Security, which is free to use, can be highly beneficial.

Simply input your birth year, your spouse’s birth year (if applicable), and both of your Primary Insurance Amounts (PIA). The tool then provides optimal claiming strategies based on your inputs.

Additionally, Social Security’s official calculators offer estimates of your PIA and benefits at different claiming ages. These resources empower you to make informed decisions on how to maximize your Social Security benefits effectively.

Do Not Work and Claim Social Security Benefits

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If you receive Social Security benefits while working and are under full retirement age for the entire year, the Social Security Administration deducts $1 from your benefits for every $2 you earn above the annual limit.

For 2024, this limit is $22,320. Upon reaching full retirement age, the SSA deducts $1 for every $3 earned over a higher limit, which is $59,520 for 2024.

Social Security Covers Only a Fraction of Your Income

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Receiving the maximum $4,873 monthly benefit from Social Security requires a high income, but it won’t replace a significant percentage of it.

In 2023, the minimum earnings needed to max out the Social Security contribution was $160,200 and is 168,600 in 2024.

A $4,873 monthly benefit replaces only 36.5% of that amount. Even if you earned more, the maximum benefit remains $4,873 per month.

Social Security is a progressive program, meaning individuals with lower incomes see a higher percentage of their income replaced in retirement.

Conversely, those with higher incomes receive a lower percentage.

If you earned a high salary but didn’t save much for retirement, you likely have substantial living expenses that Social Security alone won’t cover. You’ll need substantial balances in your 401(k), IRA, and brokerage accounts to fill the gap.

Taxes Can Be a Significant Burden

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Receiving a substantial Social Security check can lead to high taxes.

The government uses a metric called “combined income” to determine how your Social Security benefits are taxed. Combined income includes half your Social Security benefits, your adjusted gross income, and any untaxed interest income. If your combined income exceeds certain thresholds, a portion of your benefits will be taxed.

Taxable Benefits Based on Combined Income

Up to 50% Taxable for individuals with combined income greater than $25,000 ($32,000 for married filing jointly)

Up to 85% Taxable for individuals with combined income greater than $34,000 ($44,000 for married filing jointly)

With a monthly benefit of $4,873, your combined income for 2024 would already total $29,238 before adding any other income. Additional income from retirement account withdrawals or investment gains will likely make a larger portion of your Social Security income taxable.

Moreover, the marginal tax rate on strategies like Roth IRA conversions or capital gains harvesting could become unfeasible. This happens because each additional dollar from these sources could also push an extra $0.85 of Social Security benefits into your taxable income, a phenomenon some financial planners refer to as the “Social Security tax torpedo.”

Don’t Forget State Taxes

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Besides Federal taxes, some states still tax Social Security benefits.

While paying taxes on a high income isn’t the worst outcome, it can significantly impact your retirement budget. Planning for taxes is essential if you aim to receive the maximum possible Social Security benefit.

Diversify Your Retirement Income And Don’t Rely Solely on Social Security

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While maximizing your Social Security benefits is important, relying solely on them is not enough. Social Security should be a part of a broader retirement strategy that includes multiple income streams. Consider investing in a 401(k) or IRA, building a diverse investment portfolio, exploring rental income, or even working part-time in retirement.

By diversifying your sources of income, you can ensure a more stable and comfortable retirement, free from the limitations of relying solely on Social Security.


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