Social Security doesn't pay all seniors the same amount of money. Rather, the monthly benefit you're entitled to will hinge on different factors, and you may end up collecting $2,000 a month during retirement while your neighbor, for example, only gets $1,600.
Meanwhile, there's a maximum benefit Social Security pays every year. In 2022, that max is $4,194.
Most seniors, however, don't wind up with that maximum monthly benefit. And that's not really something to worry about.
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How to score the maximum Social Security benefit
To claim the maximum monthly Social Security benefit, you need to do three things:
- Work at least 35 years
- Earn a high salary for those 35 years
- Delay your Social Security filing until age 70
Your Social Security benefits will be calculated based on your 35 highest-paid years of earnings throughout your career. And to claim the maximum monthly benefit, your income during those 35 years must hit or exceed each year's wage cap.
The wage cap is what determines how much of your income you pay Social Security taxes on. This year, that cap is set at $147,000, so earnings beyond that point aren't taxed for Social Security purposes.
Earnings beyond that point also aren't calculated into your monthly benefits. So if you earn $150,000 this year, you'll only pay taxes on $147,000, and only $147,000 will be factored into your personal benefits calculation.
Furthermore, to get the maximum monthly Social Security benefit, you'll need to delay your filing until age 70. Waiting beyond full retirement age to claim Social Security results in an increased benefit (though once you turn 70, your monthly benefit can no longer grow).
When you can't claim the maximum benefit
You might be able to put in 35 years in the workforce, and you may be willing to delay your Social Security filing until age 70. It's the earnings component that's harder to control.
If you're not in a very high-paying industry, then earning the equivalent of the yearly wage cap may not be feasible. And all the side-hustling in the world may not boost your income enough for you to reach that cap.
But if you're not eligible for the maximum Social Security benefit, don't stress. Instead, think of the different things you can do to supplement those benefits so you wind up with a comfortable retirement income.
One option, of course, is to consistently fund an IRA or 401(k) plan during your working years. You might also consider investing in assets that generate ongoing income, such as buying a home that you rent out.
You can also consider working part-time in retirement if you want more money than what Social Security is looking to pay you. And if you don't want to go out and get a boring job, find a hobby you can monetize, like baking or crafting.
The reality is that most seniors on Social Security collect a lot less than $4,194 a month. If you end up being one of them, don't beat yourself up over it. Instead, focus on the things you can do to increase your retirement income and enjoy a more satisfying lifestyle.
