You'll often hear that you shouldn't plan to retire on Social Security. That's generally good advice.
The average senior on Social Security today collects $1,665 a month. And that's not a lot of money to live on.
On the other hand, some seniors collect a lot more money from Social Security on a monthly basis. The highest monthly benefit available this year is a pretty impressive $4,194.
In fact, if you're collecting the maximum monthly Social Security benefit, you may not need to tap your savings all that much to cover your living costs. This especially holds true if you live a fairly frugal lifestyle.
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But what if you're still working and in the process of planning for retirement? How can you know whether your monthly benefit will be closer to the average $1,665 or the max $4,194?
The answer? If you have many working years ahead of you, it may be harder to get a spot-on estimate of your future benefit. But you can at least get a ballpark figure and work from there.
An easy way to get at that number
The Social Security benefit you're entitled to in retirement will hinge on your wages during your 35 highest-paid years on the job. From there, there's a special formula used to calculate benefits that's somewhat complicated. So rather than do all that number-crunching, instead, create an account on SSA.gov and access your annual earnings statement. That document will contain an estimate of your future Social Security benefit.
Of course, if you're in your 30s or 40s and are only halfway through your career, that estimate may not be all that accurate. That's because your earnings might grow as your career progresses, and also, because at that point, you won't have 35 full years of work under your belt. But if you check out that estimate, you'll at least have a sense of what benefit you may be in line for.
The one move you'll need to make for the maximum monthly benefit
To snag the maximum monthly Social Security benefit, you'll need to be a high earner for at least 35 years. But that's not all. You'll also need to delay your Social Security filing until age 70.
You're entitled to your full monthly benefit at full retirement age (FRA), which, if you were born in 1960 or later, is 67. If you were born earlier, FRA is either 66 or 66 and a specific number of months. But for each year you delay your filing past FRA, your benefits grow 8% on a permanent basis, up until age 70.
Now you may not earn enough during your career to snag the maximum monthly benefit. But even if you do, filing at FRA won't be enough. Rather, you'll need to hold off until your 70th birthday.
Should you aim for the maximum monthly benefit?
There are certain steps you can take to eke more money out of Social Security, like delaying your filing. But you may not be able to control how much you earn, which could limit your ability to snag that max benefit.
Rather than worrying about that, though, focus your energy on building yourself a nice retirement nest egg to supplement your Social Security income. Most seniors do not end up getting the maximum monthly Social Security benefit -- and unless you're a high earner, it's fair to assume you'll fall into that category. But if you work on building a solid nest egg, you'll put yourself in a position to enjoy retirement to the fullest -- even if your Social Security checks fall short of the maximum you can collect each month.
