Social Security pays benefits based on your work history, but there's a maximum amount that you can get from the program in monthly retirement payments. What that maximum is depends on several factors, including when you file for benefits. As the situations below make clear, the longer you wait to claim, the greater your maximum Social Security benefit can be. But sometimes, getting the biggest possible monthly check isn't the best way to make the most of Social Security.
The biggest check for a 62-year-old retiring in 2017: $2,153
You can collect Social Security benefits as early as age 62, but to do so, you have to accept a reduction in your monthly payment compared to what you'd receive at full retirement age. For those born between 1943 and 1954, the reduction in benefits at age 62 was 25%, but that's in the process of climbing to 30% for those who were born in 1960 or later as the full retirement age rises from 66 to 67.
To collect this maximum amount, you have to have worked for 35 years or longer and collected the maximum wages on which the government collects Social Security payroll taxes. Anything shy of that number, and you'll get a smaller benefit. However, for those who are fairly close to maximum-income earning during their careers, the size of monthly benefits doesn't drop as quickly as it does for lower- and middle-income earners.
The maximum benefit for a 65-year-old retiring in 2017: $2,542
Age 65 used to be the full retirement age, but legislation in the 1980s made it technically another early retirement time for Social Security benefits. However, the reduction for taking benefits at age 65 is much smaller than for early benefits at age 62, and that's a big part of why the maximum benefit for 65-year-olds is almost $400 higher.
In particular, the penalty for taking benefits about a year early is around 7%, leading to only a minimal reduction in one's base benefit. Keep in mind that in exchange for that extra $400 per month, you have to forego receiving three years' worth of benefits, which can be as high as $77,500. If you live long enough, you'll eventually catch up to and surpass that figure by receiving higher monthly payments, but it can take a long time.
The largest payment for 66-year-olds: $2,687
Wait an additional year, and you can boost your benefit another $145 to $2,687 per month. Until recently, this represented full retirement age, but starting with those born in 1955, a rise in the retirement age makes age 66 an early retirement date.
By the mid-2020s, those who turn 66 will see a reduction of nearly 7% in their benefits compared to full retirement age. However, for now, the reduction is small, and it will grow only very slowly over time.
Top benefits for those turning 70: $3,538
The absolute maximum benefit comes for those who reach age 70, because they can claim delayed retirement credits of 30% or more depending on full retirement age. The $3,538 figure issued by the IRS is almost 32% higher than the age 66 number, reflecting the reward for waiting longer.
Again, the longer you wait, the fewer checks you receive. However, with the maximum being almost $1,400 higher than claiming at age 62, it's easy to see the benefit of delaying as long as you can.
Social Security benefits are important because they'll make up your most reliable income throughout your lifetime. By knowing the maximum you can get from Social Security, you'll be in the best position to get as much as the program will make available to you. Even if you can't earn enough to max out your Social Security, just bear in mind that the higher your earnings, the closer you'll get to the maximum amounts listed above.