Maxing out your Social Security benefit is possible only if you earn a high salary and wait a long time to claim benefits.
The maximum Social Security retirement benefit available to seniors in 2023 is $4,555.
Unfortunately, very few people will see such a large Social Security check. If you want to be among the minority of retirees with a $54,660 annual retirement benefits payment, there are three things you need to do prior to claiming your benefit. Here’s what those three things are.
1. Earn one of the highest salaries in the country
You’re going to need to be a high earner if you want to get the max monthly Social Security benefit. And there’s a simple reason for that. Your retirement check is directly based on earnings, so the more earnings you have, the higher the benefit — up to a point.
There’s a cap on the amount of earnings that count toward calculating your Social Security, which is the reason why there is a maximum benefit in the first place. Each year, workers pay Social Security taxes on income up to a wage base limit. They get credit for earnings up to this amount. Any money earned above the wage base limit goes untaxed and isn’t factored in when a person’s retirement benefits are calculated.
This means the max benefit is available only to people who earn the wage base limit (or above). These workers have the highest possible earnings history, which leads to the highest possible monthly Social Security check.
The wage base limit in 2023 is $160,200, but it’s adjusted each year for inflation (it was $147,000 in 2022). The Social Security Administration reports that just 6% of workers each year have earnings that exceed this limit. If you want the max Social Security check, you’ll have to join them.
2. Put in 35 years at your high salary
When Social Security determines how much money you’ll receive as a retiree, the Administration calculates your inflation-adjusted average wage over the 35 years you earned the most, and you then get benefits equaling a percentage of that amount. This means that you must earn your very high salary for a long time to get a $4,555 benefit.
To max out your benefit, every single one of the 35 years, included when it is calculated, must be a year in which you earned at least the wage base limit. If you have even a single year of lower earnings that are part of your benefits calculation, you won’t have the highest earnings possible, and your Social Security benefit will fall short of the maximum available.
If you didn’t earn the wage base limit or more in your very first year of work and in every single year thereafter, you are going to need to work more than 35 years so those lower-earning years drop out of your calculation. Say, for example, you started earning the inflation-adjusted equivalent of $160,200 five years after you started working, and then earned it every year from then on. You’d need to put in at least 40 years total on-the-job so every one of the 35 years counted in your formula is one in which you had the maximum taxable earnings.
3. Turn 70 years old
Maxing out benefits by earning the highest taxable salary over 35 years will put you on track toward a $4,555 benefit, but this isn’t enough. You also must put off your Social Security claim until age 70.
You are allowed to claim Social Security starting at age 62, but for each year you wait from that time until 70, you can increase the monthly checks you get. If you want the absolute maximum $4,555 benefit, you have to first max out your countable earnings (as mentioned above), and you must then increase your benefit as much as you are allowed by waiting until 70 to claim it.
Of course, you can retire before 70 if you’re able to do so without Social Security. You can live on other income sources and simply put off your benefits claim until you reach this milestone age. But if you’re going to need the max Social Security to help fund your retirement, you will have to wait until 70 to leave work.
Doing these three things is not possible for many people, but you can still have a secure retirement if you don’t pull them off. You will just need to plan for a smaller Social Security benefit. Your benefit will replace around 40% of pre-retirement income, so be sure to save in a 401(k) or other account in order to amass the rest of the money you’ll need to support yourself in comfort in your later years.
