Here’s how to earn the monthly maximum of $4,194 for Social Security

(Sam Swenson, CFA, CPA)

Earning the top Social Security benefit is no easy feat; not only do you have to make a lot of money throughout your career, but you have to do it consistently. Plus, you have to wait until age 70 to earn more deferred retirement credits and ultimately maximize your monthly allowance.

Let’s review the three levers you need to pull to receive the highest monthly check in retirement.

1. I work for at least 35 years

Social Security calculations look at your 35 highest earning years; if you haven’t worked for that period of time, your average years without income will be calculated into your benefit calculation. Fortunately, if you took time off early in your career, you have an opportunity in your 50s to 60s to replace those zero-income years and eventually increase your Social Security payment.

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Those who earn the highest monthly payouts in retirement are the ones who have paid the most Social Security taxes into the system over an exceptionally long period of time.

2. Earning the maximum taxable wage base

To reach the maximum Primary Insurance Amount (PIA) in retirement, you also need to reach the maximum Social Security taxable wage base in your 35 highest income years. When Social Security began nearly a century ago, the maximum wage base was just $3,000. In 2022, the maximum wage base is $147,000 and is expected to increase a sizable 8.9% to $160,200 in 2023.

The maximum wage base is the income level at which Social Security taxation stops. For employees, all earnings at or below the maximum taxable wage base are taxed at 6.2% and earnings go into determining the amount of your future pension. To lock in the highest monthly payment in retirement, you’ll need to have earned the maximum salary base in everything or your 35 highest earning years.

Not an easy task considering that only 6% of the workforce reaches the maximum in any given year.

Image source: Getty Images.

3. Wait until age 70 to claim benefits

Waiting until age 70 to take Social Security comes with a few key benefits. First, you have a longer runway to rack up higher earning years if you plan to work into your 60s. After that, you can earn up to 124% of your PIA just by waiting three years past full retirement age (FRA) to claim benefits. Finally, by waiting until age 70 to lock in benefits, you’ll establish a higher inflation-adjusted spending plan that can help you cover living expenses for the rest of your life.

This isn’t always as straightforward as it sounds, since people face a variety of different challenges as they enter their 60s, and it may not be possible to delay Social Security that long. But if you’re physically and mentally able to keep working, and you have the personal savings to cover spending gaps, waiting until 70 can really pay off in the long run.

Only a small fraction of workers manage it

The reality is clear: only a small, declining percentage of workers actually receive the maximum Social Security benefit in retirement. This comes at the intersection of having worked at least 35 years in a high-paying career and delaying formal retirement until age 70. Taking home $4,194 a month in benefits only happens if you’re motivated, healthy, and know exactly how to play the game.

That said, there’s no shame in taking home less than the best. as long as you also work to build your personal savings along the way. If a $4,194 monthly payment isn’t achievable, you can still work to improve your payout by working longer, earning more, or even waiting an extra year to claim benefits.

The $18,984 Social Security bonus that most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a rise in retirement income. For example: One simple trick could make you up to $18,984 more… every year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

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