In 2022, some retirees will receive a monthly Social Security check as high as $4,194. This is the maximum benefit available, though, and the vast majority of seniors will get a far smaller payment.
How can you tell if you're on track to be one of the lucky few with a $50,328 annual Social Security income? Ask yourself these key questions.
1. Have you consistently earned very high income over your career?
Social Security benefits are based on pre-retirement income. In fact, they're designed to replace around 40% of your earnings before leaving the workforce. This means that you'd need to have had a pretty high income throughout your career in order to get a $4,194 monthly benefit.
How high? The exact amount you must earn each year in order to get the maximum Social Security benefit is called the "wage base limit," and it varies by year. In 2022, you'd need an income of $147,000 or higher to be on schedule for the max retirement benefit. In 2021, this amount was a little lower at $142,800.
The earnings required vary because the amount you must earn is adjusted to account for wage growth. It's always around the inflation-adjusted equivalent of $147,000, though, and it's far above what most people earn.
If you're wondering what happens if you earn more than this amount, it doesn't matter. There's a cap on the amount of income that counts toward determining Social Security benefits. Anything you earn above the wage base limit isn't subject to Social Security tax and doesn't factor in when your monthly benefit is set.
So, if you earn below the wage base limit any year, you won't be on track for the maximum benefit. But if you earn more, you won't see a higher Social Security payout because of it.
2. Will you put in at least 35 years of work?
Social Security doesn't just base your benefit on a single year of earnings. The income used to determine your retirement benefits equals your average earnings over the 35 years when your wages were highest.
If you work fewer than 35 years, you'll have $0 annual incomes included in your benefits calculation. Since years of $0 wages lower the average wage used to set benefits, you won't earn the maximum monthly retirement income.
3. How old will you be when you claim Social Security benefits?
Benefits can be claimed starting at 62. But if you don't wait until 70 to get your first payment, you won't be on track to max out your benefits. That's because waiting to claim Social Security raises the amount of your payment. Your standard benefit goes up by 8% per year for each year you wait beyond full retirement age to claim it.
The absolute maximum benefit, in other words, is reserved for people who had the maximum possible average wage used to determine their standard benefit and who increased that standard benefit by waiting until 70 to collect.
If you don't accomplish any one of these three things, the maximum Social Security benefit will be out of reach. But don't feel bad: Few people get $4,194 each month. And if you have enough supplementary savings, you won't need checks that big to have security in your later years.