What Is The Maximum Social Security Benefit?

Feb 19, 2024 By Susan Kelly

The highest Social Security retirement payment you can get is based on several criteria, including your age when you begin receiving benefits and the length of your work history. The maximum monthly benefit in 2022 will be $3,240 for those who reach full retirement age (FRA) at 66. However, the maximum payment is $4,194 for individuals who are eligible and wait to file until they are 70 years old.

Calculation of Social Security Benefits

The first step to obtaining Social Security benefits is to meet the 40-work-credit threshold, which is roughly equal to 10 years of employment.

To be eligible for the maximum payment, you must work for 35 years and earn the maximum amount of Social Security taxable income. In 2022, the maximum will rise to $147,000, up from $142,800 in 2021, the number of wages due to Social Security tax.

Your 35 highest-earning years are considered (if you worked for more than 35 years). All salaries are adjusted for inflation. Based on the year they were paid, wages from preceding years are multiplied.

How to Maximize Retirement Funds

Saving for retirement is critical since many individuals will be unable to depend on Social Security alone. Consider investing money in tax-advantaged investment vehicles like an individual retirement account to increase your retirement income.

An IRA's Workings

It is possible to open several tax-deferred or tax-free retirement plans, such as an individual retirement account (IRA). You can utilize it to invest in stocks, bonds, and other financial instruments.

Even if you're already contributing to a workplace savings plan like a 401(k), you can contribute an additional $6,000 each year to a regular or Roth IRA (k).

It's possible to deduct contributions to a conventional IRA, which can lower your tax bill the year you make them. Your assets grow tax-free, and you may take money tax-free in retirement with a Roth IRA, but you cannot deduct your contributions.

Start Social Security At 70

A person's maximum Social Security income depends on their age when they begin receiving payments. Every month that you wait to file for Social Security benefits between the ages of 62 and 70, your monthly benefits will be more significant.

If you were born in 1956 and are eligible for full retirement benefits in 2022, you might get up to $3,345 a month if you join up for Social Security at that time. In 2022, the maximum monthly benefit for someone claiming benefits at the age of 62 is $2,364.

Only individuals who claim Social Security benefits beyond their full retirement age are entitled to payouts over $3,500 per month. A monthly payout of $4,194 is possible for a 70-year-old high worker who enrolls in Social Security at the full retirement age.

Earn A High Salary Regularly

To get significant Social Security payouts in retirement, you will need to earn a lot of money throughout your working years. A six-figure salary has been required to get the highest Social Security benefit in recent years.

In 2022, the highest Social Security taxable earnings will be $147,000. On the other hand, the precise amount varies from year to year and has risen over time. In 2020, it was $137,700, while in 2010 it was $106,800. In 2000, the highest taxable amount was $76,200. In 1985, Social Security taxed just $39,600.

Earn The 35-year Social Security Taxable Maximum

To get the maximum amount of Social Security benefits, you must work for 35 years and earn at least the taxable maximum amount each year throughout that time frame. If you don't work for 35 years, your Social Security benefits will be reduced because the zeros in your earnings record are averaged out.

"These years of little or no income will ultimately affect the amount you receive," says William Meyer, founder of Social Security Solutions, a business that studies Social Security claim methods.

This is true whether you were laid off or chose not to work. "As soon as possible, get new work, even part-time or low-paying. You may be able to avoid using a zero in your benefit computation if your wages are taken into account."

Social Security Maximum Family Benefit

Depending on your job history, certain family members may be eligible for extra benefits. However, in the case of married couples, spouses can receive up to 50% of the higher earner's benefit at full retirement age, as long as it exceeds their benefit.

A monthly benefit of up to $1,672.50 may be available to a spouse who gets a monthly Social Security benefit of $3,345 at full retirement age. You and your spouse might get a survivor's payout of $3,345 per month, which would be increased annually for inflation if you die.

Social Security Benefits Example

An example of this is a person who will have reached FRA in 2021 at the age of 66 years and ten months, with sufficient earnings to qualify for a $1,000 monthly payment. Benefits will be reduced by 29.2% to $708 if they choose to receive them at the age of 62 since they will be eligible for benefits for a more extended period (SSA). Typically, the decline is permanent.

The person's monthly payout rises to $1,253 if they wait until age 70 to receive benefits. Due to deferring obtaining benefits past FRA, a more significant sum was accrued in delayed retirement credits. They would get $545 more per month if benefits began at age 62, a difference of 77 percent in this scenario.

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