Social Security benefits can be a lifeline in retirement, bridging the gap between what you have saved and what you need to pay the bills.
However, the average retiree only receives around $1,500 per month in benefits, according to the Social Security Administration. While that money can go a long way, if you’re depending on Social Security to make ends meet, it likely won’t be enough to cover all of your expenses.
The good news is that your benefit amount isn’t set in stone, and it’s possible to take steps to increase it. In 2022, the maximum you can earn is $4,194 per month. Here’s what it takes to earn that amount.
1. Make sure you’ve worked for at least 35 years
When calculating your basic benefit amount, the Social Security Administration takes an average of your wages over the 35 highest-earning years throughout your career. That number is then adjusted for inflation, and the result is the amount you’ll receive by claiming at your full retirement age (FRA).
In order to receive the maximum $4,194 per month, you’ll need to have worked for at least 35 full years before you begin claiming. Work any less than that, and you’ll have zeros included in your average to account for any time you were not working. Those zeros will lower your average, which will also result in a lower benefit amount.
2. Delay benefits until age 70
Your basic benefit amount based on your earnings assumes you’ll claim Social Security at your FRA. However, you can claim earlier or later than that, and the age you claim will affect your monthly payments.
Depending on the year you were born, your FRA is either age 66, 66 and a certain number of months, or 67. If you claim as early as possible at age 62, your benefit amount will be reduced by up to 30%. But if you wait until age 70 to claim, you’ll receive your basic benefit amount plus up to 32% extra each month.
Waiting until age 70 to claim is crucial if you want to earn the maximum $4,194 per month. Even if you were eligible for this amount, if you were to claim at age 62 instead of age 70, you’d only collect $2,364 per month.
3. Earn enough to reach the maximum taxable earnings limit
Your earnings will have a significant impact on your benefit amount, and the higher your income — up to a limit — the more you’ll receive from Social Security.
That cap is the maximum taxable earnings limit, which is the highest income that’s subject to Social Security taxes. By consistently reaching this limit, you’ll be on track to earn the maximum Social Security benefit amount.
The maximum taxable earnings limit fluctuates from year to year to account for cost-of-living adjustments, but for 2022, it’s $147,000 per year. For comparison, 35 years ago in 1986, the limit was $42,000 per year. To earn the maximum benefit amount, you’ll need to have been reaching these limits throughout your career.
That said, most workers won’t be able to reach this limit, and that’s OK. Increasing your income even slightly can still result in a higher benefit amount. And by taking other steps to boost your monthly checks, such as working for 35 years and delaying benefits, you can get as close as possible to the $4,194 max monthly payments.