Social Security benefits don't provide a lot of annual income for most people, with the average benefit coming in at just $1,661 per month. But for a small number of Americans, retirement benefits offer a monthly income of $4,194. This is the most money the Social Security Administration sends out each month in 2022, and checks of that size are available only to people who earned a lot of money throughout their careers.
So how much would you have to earn to max out your monthly Social Security checks? Here's what you need to know.
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Why does your salary impact eligibility for the maximum Social Security benefit?
As mentioned above, if you want to earn the maximum Social Security benefit, you must earn a lot of money for a long time.
Now, you may be wondering why that's the case. And to understand how much you'd need to earn, it's helpful to get some basic facts about the Social Security benefits formula. Specifically, Social Security is intended to replace about 40% of pre-retirement income, but the program is progressive so higher earners get a smaller percentage.
To determine your benefit, the Social Security Administration calculates your average wages over your 35 highest-earning years and gives you a percentage of them. But it only counts wages up to a set threshold called the wage base limit. Then, after determining your benefit based on average wages, the Social Security Administration adjusts the amount of your check up or down depending on the age when you claim it.
If you earned the wage base limit for a full 35 years (or more) and waited to claim benefits until 70, you would get the highest possible monthly benefit. That's because you would have the highest possible average wage and your benefits would be increased as much as possible since they don't go up any more once you wait beyond 70 to get them. Remember, in 2022, the highest possible benefit is $4,194.
How much do you have to earn in 2022 to be on track?
Your earnings in 2022 matter in determining if you're eligible for a $4,194 Social Security check only if this year is going to count as one of the 35 years used to determine your average wage. If you plan for this year to count, you would need to earn $147,000 this year, or more. That's the wage base limit in 2022. It will adjust upward next year, so you would need to earn more.
Regardless of whether you want this year's earnings to count or not, you will get a $4,194 per month benefit only if you earn at least the wage base limit for every one of your countable 35 years. And the wage base limit is always going to be the inflation-adjusted equivalent of $147,000. So, if 2021 counted as one of your relevant years, for example, you would have needed to earn $142,800 or more that year to be on track for the max benefit. And if 2020 counted, you would have needed a salary of $137,700 that year.
Each year, only about 6% of eligible workers have an income equal to or exceeding the wage base limit. Unless you're among this elite group for 35 years, you can't max out your Social Security checks. So don't count on a $4,194 benefit unless you've had a long career of high-earning years or unless you plan to earn a lot in the future.
