President-elect Joe Biden and his wife, Jill, received a combined $52,595 in Social Security benefits in 2019, according to the future first couple's tax returns.
While this may not seem like much relative to their annual combined income of $944,737 that year, it's a lot more than the typical senior couple received. In fact, Social Security's data indicates an older couple both receiving benefits in 2019 would receive an average of $2,491 per month or $29,892 per year. That means the Bidens beat the average by $22,703.
So how come the Bidens are doing so much better than most Americans with Social Security? There's one simple reason.
Social Security benefits replace a portion of average wages earned over your career
The Bidens get a larger Social Security benefit than the typical American because they earned more over their careers than most people. And benefits are based on average wages throughout your working life. Lower and middle income workers get benefits equaling a larger percentage of their average wages than high earners because the Social Security benefits formula is progressive -- but a higher average wage still always leads to at least a slightly larger benefit.
See, when your benefits are calculated, the Social Security Administration adjusts your wages for inflation, then takes an average of your wages in the 35 years you earned the most. This is used to determine your Average Indexed Monthly Earnings (AIME), which you'll receive a specific percentage of based on how high your AIME is.
The resulting number is called your primary insurance amount. You'll receive your primary insurance amount if you retire at your full retirement age, which is between 66 and 67. If you retire before it, you'll get less than your primary insurance amount due to early filing penalties. And if you retire after it, delayed retirement credits will net you a benefit increase up until age 70.
Because the formula relies heavily on average wages, those who earn more over their careers fare better than lower earners, as do people who work for at least 35 years rather than for a shorter period. Both Joe and Jill have earned good salaries for decades, so it makes sense they'd receive a benefit that's well above average.
In fact, what may seem surprising isn't that the Bidens' Social Security benefit is higher than average, but that the discrepancy isn't larger. After all, with their tax returns showing hundreds of thousands (or even millions) in annual income, you might assume their Social Security benefit would be much larger.
The reason it isn't is because of the annual wage base limit, which caps both the amount of your wages you'll have to pay Social Security tax on as well as the amount of wages factored into your AIME calculation. So while the Bidens' benefit is larger than average, it's smaller than it would have been if the wage base limit hadn't capped the amount they can receive.
The couple also opted not to delay claiming benefits until 70, which would have boosted their checks further.
Aiming for your own average-busting Social Security checks?
While you may not necessarily be able to get Social Security benefits of $4,382 per month for yourself and your spouse, you can still take steps to try to beat the average benefit. If you're hoping to supercharge your Social Security checks:
- Work at least 35 years. Otherwise, years of $0 wages may drag down the AIME used to decide your benefit amount.
- Maximize your income. The higher your inflation-adjusted income during your career, the bigger your benefit. Much of the Bidens' income didn't come from traditional wages but from other income sources. If you can't get a raise at your job, look into what else you can do to earn money, such as working an extra job.
- Try to wait to claim your benefits. While the Bidens shrunk the size of their checks by not waiting until 70 to claim them, you won't want to do that with your own benefits if your goal is to get the largest monthly income you can from Social Security. Instead, delay until 70 if you can to avoid being penalized for early filing and to capture the maximum amount of delayed retirement credits.
If you follow these steps, hopefully you'll be able to get a generous Social Security benefit -- even if it's not as large as the one going to the future president and first lady.