The answer is more complicated than you might think.
The maximum possible Social Security benefit in 2023 is $4,555 per month, which translates to $54,660 in annual, inflation-protected retirement income. This might sound like an excellent paycheck after you retire, but what do you need to do to get it?
Of course, your income during your career has a lot to do with it. In order to get the maximum possible Social Security benefit, your salary needs to be above a certain level. But there’s a lot more to the story, as you’ll see here.
What salary do you need for a $4,555 monthly Social Security benefit?
The short answer is that you’ll need a salary of $160,200 or more in 2023.
When the Social Security Administration, or SSA, calculates benefits, it uses a figure known as the contribution and benefit base (also known as the taxable maximum). This is the maximum amount of income American workers have to pay Social Security tax on, and it’s also the amount of earned income that is used to determine your initial Social Security benefit.
It’s not just your salary this year
Unlike many pension plans, Social Security benefits don’t just consider your ending salary, or even the last few years of your salary. Instead, your Social Security retirement benefit is based on the 35 highest-earning years of your career, adjusted for inflation.
Each year, the taxable maximum earnings are set by the SSA. In 2023, the amount is $160,200, as mentioned in the previous section. For 2022, it was $142,800. In 2021, the magic number was $147,000.
In order to earn the maximum Social Security benefit, you’ll need to earn more than the SSA’s taxable maximum in at least 35 different years. You can see a full list of the annual maximums on the SSA’s website.
Even if you max out your salary every year, it isn’t enough
Let’s say that you earn the annual maximum in 35 separate years. This will max out your initial Social Security benefit (or close to it) when the SSA plugs it into its benefit formula. But this won’t give you $4,555 per month in Social Security income.
Workers who qualify can choose to start their Social Security retirement benefits at any time between the ages of 62 and 70. Full retirement age is 67 years old for people born in 1960 or later and is slightly lower for those born in prior years.
Here’s the point. For every year after your full retirement age that you wait to claim your Social Security benefits, your benefit will be permanently increased by 8%. In other words, if your full retirement age is 67, waiting until age 70 will result in a 24% increase.
To make a long story short, this is what has to happen if you want the highest possible Social Security benefit. It isn’t enough to just be a high-income worker throughout your career. You need to wait until 70 to start your benefits.
The bottom line on the maximum Social Security benefit
In order to get the maximum possible Social Security benefit, you’ll need a combination of a high income throughout your career, and the ability and willingness to wait as long as possible to start collecting your monthly payments.
Doing all this isn’t possible or practical for most people. As you might imagine, only a tiny fraction of Social Security beneficiaries (less than 1%) qualify for the maximum. But knowing how the benefit process works can put you in a great position to decide the best way to maximize your own Social Security benefit.