Many retirees have a hard time making ends meet, and the income that Social Security provides is essential for their well-being. Although the maximum Social Security benefit for 2019 is $3,770 per month -- an attractive amount for nearly any retiree -- most people fall well short of getting that much in their Social Security checks.

The reason has to do with the many hoops you have to jump through to qualify for the top benefit. Moreover, even if you think you've done everything you could, there's one thing that can still stand in your way.

What you have to do to earn Social Security's maximum benefit

If you want the most you can get from Social Security, here's what you have to do:

  • Work at least 35 years.
  • Earn at least the maximum wage base on which Social Security payroll taxes get collected in those 35 years.
  • Wait to claim your benefits until age 70.

If you do that, you can reasonably expect to get as much in Social Security as possible. Yet to pull every single penny out of the program, it turns out that there's an additional requirement: Your timing has to have been right.

Three Social Security cards with a brass key on top.

Image source: Getty Images.

When you work also matters

For a long time, I believed that as long as you met the three requirements above, you'd be entitled to the absolute maximum Social Security benefit. But when a Motley Fool member named Jim discussed his situation with me, it revealed that there's an additional element involved.

Jim's situation was ideal for maximizing Social Security benefits: He was turning 70 this year and had earned maximum benefits in more than 35 years. Yet when he went to the Social Security Administration (SSA), it told him that his monthly benefit would be about $120 less than the maximum. That confirmed the numbers he had run using the SSA online benefits calculator, but it bothered him because he didn't understand why he wouldn't get the maximum.

The secret lies in the way that Social Security calculates its benefits. The starting point is your earnings history, but in order to make sure that early years in your career are treated roughly equally with later years, the SSA uses an indexing method to come up with the current-dollar value of earnings early in your career. So, for instance, if you're 62 this year and you earned $30,000 in 1999, then for purposes of determining your average indexed monthly earnings, that $30,000 would be increased by just over 65% to account for inflation over that time period. You'd therefore be credited with almost $50,000 in adjusted earnings.

Work until the bitter end

What most people don't realize is that the SSA doesn't index all of their earnings. Indexing stops two years before you first reach eligibility, which for most people is age 60. Therefore, if you claim benefits at age 70, any earnings you have between 60 and 69 aren't adjusted for inflation.

Because the wage-base limit increases over time, not working those final years will take your average indexed monthly earnings below the theoretical maximum. For instance, for Jim, not working in 2017 and 2018 took what would've been years with average indexed monthly earnings of $10,600 and $10,700 and forced him to replace them with years that had monthly earnings below $10,000 after indexing. That in turn will reduce his benefits slightly.

Don't sweat it

To be fair, though, even if you don't earn the absolute maximum, you won't typically see a huge cut in your benefits. Under the benefit calculations, you'll lose only $15 in monthly benefits for every $100 in average indexed monthly earnings you have below the theoretical maximum. That's why in Jim's case, the reduction amounted to just 3% to 4% of his overall benefit.

Nevertheless, it's useful to understand why Social Security's maximum benefit might be out of your reach. Even if you don't intend to work until the bitter end and therefore don't get the absolute maximum, waiting until 70 to claim for Social Security is a good way to boost the size of your benefit check substantially.