In 2021, the maximum Social Security benefit retirees can receive is $3,895. But will your benefits be anywhere close to this amount?

Chances are good that your monthly income from Social Security will fall far short of the maximum benefit, but here's how to tell if you're in spitting distance of receiving this substantial amount of Social Security income.

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Will your benefits be close to the maximum? 

In order for your Social Security benefit to be close to the maximum benefit, you have to do three things:

  • Work for at least 35 years.
  • Earn wages that equal or exceed the "wage base limit" for 35 years.
  • Start your Social Security checks at the age of 70.

Working for 35 years is crucial because the Social Security Administration calculates your standard benefit by giving you a percentage of average wages in the 35 years your earnings were highest (after adjusting for inflation).

If you want the highest possible standard benefit, you thus need the maximum possible average wage. And if you work for less than 35 years, you would drag your average wage down because some years of $0 earnings would be included when it's calculated. 

Earning income at least equal to the wage base limit is also key to getting the highest possible Social Security check. See, each year, the Social Security Administration sets the wage base limit, which is the maximum wage subject to Social Security tax.

This wage base limit is why there's a cap on the average wages that can be used to determine your benefit. Without it, those who earned millions of dollars per year would have a huge average wage, and thus a huge benefit. If you earn less than the wage base limit in any of the 35 years used to calculate your benefit, you won't have the highest possible average wage and thus you won't have the highest possible standard benefit. 

Finally, you have to start Social Security checks at 70 to get the maximum $3,895 benefit. That's because your standard benefit increases for each year you wait to claim it after 70. So, you need:

  • The maximum possible average wage to get the highest possible standard benefit
  • The maximum number of delayed retirement credits, which are earned until 70, to raise your standard benefit to the highest possible level. 

Why do so few people max out their Social Security income? 

Unfortunately, most people don't come anywhere close to earning the maximum Social Security benefit because they fall short at one or more of the three steps necessary to earn it. 

See, many people can't work for 35 years because they have family obligations or can't find a position for that entire time. And many people can't put off claiming Social Security checks until 70 either. It's common to need (or want) to claim benefits before then in order to make retirement possible. 

Finally, it's even more difficult to earn the maximum taxable wage (or more) for a full 35 years because the wage base limit is set really high. In 2022, you'd need to earn $147,000 or more in order for your earnings to equal or exceed the maximum taxable wage. Most people don't earn that much. And you'd need to earn the inflation-adjusted equivalent of that large of an income for 35 years, which is even more difficult. 

The good news is, while you may not be able to earn the maximum $3,895 Social Security benefit, you can still increase your own benefit by taking steps to raise your income or delaying the time you claim your checks. This may well be worth doing if Social Security will be an important income source during your later years.