As of March, the Social Security Administration (SSA) reported that the average monthly Social Security benefit for retired workers came out to $1,665.18. However, it's possible to receive a monthly benefit of up to $4,194 provided that you meet certain requirements.
Qualifying for the maximum monthly benefit is easier said than done, but there are steps you can take to boost the amount you will receive from the program in your non-working years. Here's what you need to know to optimize your Social Security situation.
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Maximize your earnings over the 35-year calculation period
The first step in determining your Social Security benefit will be the calculation of your average indexed monthly earnings (AIME) across your 35 years of highest income. In most cases, this means it's important to have at least 35 years of earnings to base the AIME calculation on, because even a few years without earnings will have a substantial effect on the benefit you receive.
In order to qualify for the $4,194 max monthly benefit, you will need to be in the maximum taxable income bracket for Social Security across the duration of your AIME period. That means having average, inflation-adjusted earnings of at least $147,000 across your 35 highest years of earnings. For reference, the SSA estimates that just 6% of Americans meet the annual income requirement each year.
If you are earning substantially more later in life, it can be in your interest to work additional years to boost your AIME. In doing so, you will also be on the path to upsides that come with delaying benefits past your initial eligibility at age 62 and then beyond your full retirement age (FRA).
Wait until age 70 to begin taking benefits
There are advantages and trade-offs to delaying when you take Social Security benefits. The chart below outlines full retirement ages by birth year and the amount that your benefit will be reduced if you begin taking Social Security at initial eligibility versus waiting until your FRA.
| Birth year | Full retirement age | Percent retirement benefit is reduced by if benefits taken at 62 compared to FRA |
|---|---|---|
| 1943 through 1954 | 66 | 25% |
| 1955 | 66 and 2 months | 25.83% |
| 1956 | 66 and 4 months | 26.67% |
| 1957 | 66 and 6 months | 27.5% |
| 1958 | 66 and 8 months | 28.33% |
| 1959 | 66 and 10 months | 29.17% |
| 1960 and later | 67 | 30% |
Data source: Social Security Administration.
Even if your average earnings across the 35-top-year calculation period put you in or above the maximum taxable earnings bracket of $147,000, taking Social Security payments at 62 will result in your monthly payment amount being reduced by as much as 30%, compared to if you had waited till full retirement age. That means that the highest possible monthly Social Security benefit you can receive if you start collecting at age 62 is $2,364.
Data source: Social Security Administration. Chart by author.
In order to hit the maximum monthly benefit of $4,194, you will need to have a FRA of 66, satisfy the maximum taxable income requirement, and wait until age 70 to begin taking Social Security.
Approach Social Security with your personal situation in mind
Very few people will meet the taxable income requirements needed to qualify for the maximum Social Security benefit, but everyone can apply the same basic guidelines to their own retirement planning. It's generally advisable to maximize your earnings across the calculation period, and from there, you can assess the advantages and trade-offs of when to take benefits.
Delaying Social Security can eventually result in a substantial increase in the amount that you receive monthly, but you'll also wind up foregoing benefits in the meantime. Your health, financial position, and other factors should all be considered as you determine the approach that's best for you.
