In 2021, the average Social Security beneficiary is expected to receive $1,543 per month, or just over $18,500 per year. For retirees who are expecting to depend on their monthly checks to make ends meet, that money is hardly enough to enjoy retirement comfortably.
The maximum amount you can receive in benefits when you claim at your full retirement age is $3,148 per month -- which is $1,605 more per month than the average beneficiary collects. In order to earn the maximum benefit amount, there are three steps you'll need to take.
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1. Work at least 35 years
The Social Security Administration calculates your benefit amount by taking an average of your wages over the 35 years of your career that you earned the most. That earnings average is then adjusted for inflation, and the result is the amount you'll receive if you begin claiming benefits at your full retirement age.
If you work fewer than 35 years, you'll have zeros added to your equation to account for the years you weren't working. Those zeros will lower your earnings average, which will, in turn, reduce your benefit amount.
2. Earn enough to meet the maximum taxable earnings limit
Working a full 35 years is only half of the equation when you're aiming to earn the maximum benefit amount. You'll also need to earn a certain income over those 35 years.
In general, the higher your income, the more you'll collect in Social Security benefits each month. However, once your income reaches a certain limit, your benefits no longer increase. That limit is the maximum taxable earnings limit, which is the highest income that's subject to Social Security taxes.
The maximum taxable earnings limit changes slightly each year, and for 2021, it's $142,800 per year. If your goal is to earn the maximum benefit amount each month, you'll have to consistently reach the earnings limit throughout your career.
3. Wait until your full retirement age to begin claiming
Finally, even if you've worked for 35 years and have consistently reached the maximum taxable earnings limit, you'll also need to wait until your full retirement age (FRA) to max out your benefits.
Depending on the year in which you were born, you'll have an FRA of either 66, 66 and a certain number of months, or 67. By claiming before your FRA, your benefits will be reduced by up to 30%. In order to receive the maximum benefit amount, you'll need to wait a few years to start collecting Social Security.
What if these goals are out of reach?
Realistically, most Americans may not be able to earn a six-figure salary for decades and then wait until their mid- to late-60s to file for Social Security. The good news, though, is that you can boost your benefits by doing any one of these three things.
One of the most effective ways to increase your benefit amount, for example, is to delay claiming benefits. If you wait until age 70 to begin claiming, you'll receive your full benefit amount plus a bonus of up to 32% each month. If you were collecting the average benefit amount of $1,543 per month at your FRA, an extra 32% would amount to nearly $500 more each month. It may not be the maximum benefit amount, but that extra money can go a long way.
There are multiple ways you can boost your Social Security benefits. Regardless of whether you're able to earn the maximum benefit amount or not, taking advantage of these three steps can potentially increase the size of your checks by hundreds of dollars per month.
