Getting the maximum Social Security benefit requires a combination of two rare achievements.
The maximum Social Security benefit in 2022 is $4,194 per month, or $50,328 per year. And while this would be a pretty healthy retirement income for most people all by itself, the reality is that very few people get the maximum, and the average retiree gets about $1,672 as of August 2022.
In this article, we’ll discuss the two things you must do to achieve the maximum possible benefit, why it’s not practical or necessary for most people, and what you can do to maximize your own Social Security retirement benefit.
A rare combination is needed to get the maximum
As mentioned, to get the maximum possible Social Security retirement benefit, two things need to happen.
First, you must earn more than the maximum taxable Social Security earnings, also known as the “contribution and benefit base,” in at least 35 years. If you aren’t familiar, Social Security sets a maximum amount of earnings that are subject to tax each year. This is also the maximum amount of earnings that can be considered when calculating your benefit.
For example, the contribution and benefit base for 2022 is $147,000. In 2021, it was $142,800. The Social Security Administration (SSA) adjusts this for inflation each year, and just for reference, here are the contribution and benefit bases for the past 10 calendar years (you can see the full list here):
| YEAR | CONTRIBUTION AND BENEFIT BASE | YEAR | CONTRIBUTION AND BENEFIT BASE |
|---|---|---|---|
| 2013 | $113,700 | 2018 | $128,400 |
| 2014 | $117,000 | 2019 | $132,900 |
| 2015 | $118,500 | 2020 | $137,700 |
| 2016 | $118,500 | 2021 | $142,800 |
| 2017 | $127,200 | 2022 | $147,000 |
DATA SOURCE: SSA.
Just 6% of workers earn more than the contribution and benefit base in any given year. As you might imagine, far fewer workers achieve this in 35 different years of their careers.
Second, to get the maximum possible benefit, you’ll need to wait until age 70 to start collecting your benefit. Full retirement age for Social Security ranges from 66 to 67, depending on the year you were born, and your benefit is permanently increased by 8% for every year you wait beyond that, to a maximum of age 70. Only 5% of men and 7% of women wait this long, according to the SSA.
Most people won’t get the max, but that’s OK
When you combine these two things that need to happen for the maximum benefit, fewer than 1% of American get the maximum. And not surprisingly, not everyone is capable of earning the maximum in 35 different years (only 20% of Americans earn the maximum in any year of their careers), plus it isn’t always practical to wait until 70 to claim.
It’s also worth mentioning that Social Security isn’t designed to be enough retirement income all by itself. Social Security is only designed to replace about 40% of the average person’s pre-retirement income. When combined with other sources of retirement income like 401(k)s, IRAs, pensions, etc., even the average Social Security benefit could play a major role in your financial comfort in retirement.
However, by understanding how the Social Security benefit formula works and the effect of earning a little more or waiting a little longer to claim your monthly checks, you’ll be in the best possible position to make decisions regarding your retirement benefit.
You can get an estimate of your benefit by creating an account at www.ssa.gov if you haven’t done so already. You can use this number to modify your Social Security and retirement savings strategies as needed to achieve the right amount of retirement income for you.