You'll often hear that Social Security won't pay you enough income to live comfortably. But what if the program were to pay you a rather generous $4,194 a month?
That's the maximum monthly benefit Social Security pays today. That figure has been different in the past and is apt to change over time, but as of now, if you're on track to collect $4,194 from Social Security, it really doesn't get better than that.
But is that $4,194 monthly benefit attainable for you? Here's how to know.
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1. How high is your income, and how high has it been?
To snag the maximum monthly Social Security benefit, your earnings need to reach or exceed the annual wage cap for at least 35 years. Now when we talk about the wage cap, we're referring to the limit for Social Security payroll taxes on earnings.
This year, for example, the wage cap sits at $147,000, which means if you earn $247,000 as an annual salary, your last $100,000 of wages won't be subject to Social Security taxes at all.
Some lawmakers are actually trying to change this policy because they feel it isn't fair. But for now, we do have a wage cap in place, and your income will need to hit it for three and a half decades to claim the highest possible Social Security benefit.
2. Have you worked for 35 years?
Social Security only takes your 35 highest-paid years of earnings into account when calculating your monthly benefit. If you don't have a full 35 years of work on record, the maximum monthly benefit will be off the table. It doesn't matter if you have 34 years when you earned $500,000 -- if you're missing income for that final year, it will leave you with less money.
3. Are you delaying your claim until age 70?
You're entitled to your full monthly Social Security benefit based on your wage history at full retirement age (FRA). That age is 66, 67, or somewhere in between, depending on your year of birth.
It's not possible to claim the maximum $4,194 benefit at FRA. Rather, you'll need to delay your filing to age 70 to score that payout. That's because Social Security rewards filers who delay their claims with more money.
What if you're not on track for the highest monthly benefit?
A $4,194 monthly Social Security benefit may be a nice thing to have. But don't sweat it if that benefit just isn't in the cards. The reality is that most seniors don't wind up with the maximum monthly benefit, but if you're nearing retirement with a robust nest egg, you may be in line for a nice income -- even if a lot of it comes from you.
Meanwhile, if you're not close to retirement age and are realizing that the maximum monthly benefit is off the table, use that as motivation to ramp up your savings rate. If you build a strong enough nest egg, you may reach a point where it doesn't matter what Social Security pays you during retirement.
