The maximum possible Social Security benefit for someone claiming in 2022 is $4,194 per month, or $50,328 per year. However, the average monthly retirement benefit is $1,668, and very few retirees end up getting the maximum. So, how much do you need to make if your goal is to max out Social Security?
The short answer is that in order to maximize Social Security, you'll need to earn at least $147,000 from covered employment or self-employment. But there's much more to the story. Here are the details of how to max out Social Security, and why a high income isn't enough all by itself.
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The salary you'll need is different each year
In order to max out your Social Security earnings in 2022, you'll need to earn at least $147,000, as previously mentioned. But this amount changes every year to keep up with inflation. Just to name a couple of recent examples, you would have needed to earn $137,700 and $142,800 in 2020 and 2021, respectively.
This is known as the "contribution and benefit base." Once you claim benefits, the Social Security Administration (SSA) will consider your 35 highest-earning years, indexed for inflation. You can view the contribution and benefit base for every year since 1937 on the SSA's website. The key takeaway is that to max out Social Security, you'll need to have earned more than the contribution and benefit base in at least 35 different years.
Just being a high earner won't automatically get you the max
Even if you have 35 years of maxing out Social Security's contribution and benefit base, it doesn't automatically qualify you for the maximum possible benefit.
For Americans born after 1959, full retirement age for Social Security purposes is 67 years old, but qualified individuals can choose to start their retirement benefits at any point between 62 and 70 years of age. Benefits are permanently reduced for claiming before full retirement age, and are permanently increased for waiting.
So, in addition to earning at least the maximum in 35 separate years, you'll also need to wait as long as possible if you want to receive the highest Social Security benefit possible. In fact, the maximum possible Social Security benefit in 2022 for someone who files at full retirement age is $3,345 per month -- significantly less than the $4,194 maximum. If you want the latter, you'll need to wait until you turn 70 to start receiving benefits.
Do you need the $4,194 maximum Social Security payment?
In order to receive the maximum possible Social Security payment, you'll need a perfect storm of factors. You'll need to be a high earner for your entire career (or at least 35 years of it), and you'll need to wait until age 70 to start collecting benefits. Many people simply can't wait this long, and many retirees don't want or need to. Social Security should be considered along with other sources of retirement income, such as pension plans and investment accounts, to determine your retirement income needs.
It can make sense to take smaller steps to increase your Social Security benefit, such as waiting an extra few months or a year to claim benefits. After all, for most retirees Social Security is the only form of inflation-protected income they'll have. But not all retirees need to squeeze every possible dollar out of their benefits.
