The max Social Security benefit could set you up for a comfortable retirement, but only a few pull it off.
The maximum Social Security benefit in 2022 is $4,194 per month — over $50,000 per year. But very few will ever see checks of this size. You’d need a pretty high income to pull this off, and that’s not the only requirement. You also have to claim at a specific time. Here’s a closer look at what you need to do in order to claim the biggest checks the Social Security Administration offers.
How the government calculates your Social Security benefit
The first step in calculating your Social Security benefit is figuring out your average indexed monthly earnings (AIME). The government does this by totaling your earnings during your 35 highest-earning years, adjusted for inflation, and dividing it by 420 — the number of months in 35 years. But there’s a catch for high earners.
The government only counts the money you’ve paid Social Security taxes on in a given year, and that’s not always the same as your income. In 2022, for example, you only pay Social Security taxes on the first $147,000 you earn. So whether you earn $150,000 or $1 million, the government is only going to count $147,000 when evaluating your income for that year.
Once the government has your AIME, it plugs it into a benefit formula, which varies based on your birth year. The current Social Security benefit formula looks like this:
- Multiply the first $1,024 of your AIME by 90%.
- Multiply any amount over $1,024 up to $6,172 by 32%.
- Multiply any amount over $6,172 by 15%.
- Total your results from Steps 1 to 3 above and round down to the nearest multiple of $0.10.
In the above example, $1,024 and $6,172 are known as the bend points. These change every year. The bend points you’ll use are the ones in effect for the year you turned 62. Here’s a table where you can see all the bend points for previous years.
Your results from the formula above show what kind of a benefit you’ll get at your full retirement age (FRA). That’s anywhere from 66 to 67, depending on your birth year. You must wait until this age to claim Social Security if you want the full benefit you’re entitled to based on your work history.
If you claim earlier or later, the government runs your primary benefit amount — the amount you’re eligible for at your FRA — through another formula.
Every month you claim benefits under your FRA reduces your checks. Those who sign up right away at 62 only get 70% of their full benefit per check if their FRA is 67, or 75% if their FRA is 66. Delaying Social Security increases your benefit until 70, when you qualify for your largest checks. That’s 124% of your full benefit per check if your FRA is 67, or 132% if your FRA is 66.
What it takes to bring home the $4,194 checks
In order to earn the maximum $4,194 Social Security checks, you pretty much have to overachieve in every step along the way. First, you need to achieve the maximum AIME, which means earning the equivalent of $147,000 in 2022 dollars in at least 35 years. Then, you’d have to wait until 70 to sign up.
For most people, this isn’t feasible, and even if it is, it might not always be smart. If you have a terminal illness, for example, you may not get anything from Social Security if you wait until 70 to claim.
But just because you don’t qualify for the maximum benefit doesn’t mean you’re doomed to small checks. You can use the information we discussed above to pursue your own maximum benefit.
To start, seize every opportunity you can to increase your income today. This will help boost your AIME and lead to larger Social Security checks at any age. You could try negotiating a raise, finding a better-paying job elsewhere, or starting a side hustle to bring in extra cash.
Try to remain in the workforce for at least 35 years if you can. This will prevent zero-income years from tanking your benefit calculation. If possible, consider working even longer. You’ll probably make more at the end of your career than you did in the beginning. Once you’ve passed the 35-year mark, your higher-earning, more recent years replace your earlier, lower-earning years in your benefit calculation.
Finally, choose your starting age carefully. If you have a short life expectancy, signing up early is usually wise. Those who expect to make it into their 80s often get larger lifetime benefits by delaying for a while, but this might not be financially feasible for you. Even if you could delay a few months, though, it can lead to permanently larger checks.
