Social Security benefits are a major source of income for millions of retirees. However, the average retiree only receives around $1,500 per month in benefits, according to the Social Security Administration.
Larger checks can go a long way toward enjoying a more comfortable retirement, and the maximum amount you can receive from Social Security is $3,895 per month.
To earn the maximum benefit amount, you'll need a strategy. By accomplishing these three things, you can collect as much as possible from Social Security.
1. Work for at least 35 years
How much you'll receive in Social Security benefits depends on your income and how many years you work. The Social Security Administration takes an average of your income throughout the 35 highest-earning years of your career, adjusts it for inflation, and the result is your benefit amount.
If you've worked fewer than 35 years when you file for benefits, the years you weren't working will be included as zeros in your average. Those zeros will bring down your average and reduce your benefit amount.
To receive the maximum benefit amount possible, you'll need to ensure you've worked for a full 35 years before you begin claiming.
2. Consistently reach the maximum taxable earnings limit
Not only is the length of your career important, but how much you were earning during those 35 years will impact your benefit amount, as well.
The maximum taxable earnings limit is the highest amount subject to Social Security taxes. If you earn more than that limit, you won't pay taxes on that additional income. You also won't receive a higher benefit amount.
In 2021, that limit is $142,800. Each year, the limit changes to account for inflation. If you had started your career 35 years ago in 1986, the maximum taxable earnings limit that year was $42,000.
In order to collect as much as possible from Social Security, you'll need to have consistently reached the maximum taxable earnings limit since age 22. Even if you haven't met that goal, though, the higher your earnings, the more you can potentially receive in benefits.
3. Wait until age 70 to begin claiming
The final piece of the Social Security puzzle is the age at which you begin claiming. If you claim at your full retirement age (which is age 67 for anyone born in 1960 or later), you'll receive the full benefit amount you're entitled to. But by waiting beyond your full retirement age to claim (up to age 70), you'll receive more each month.
Waiting a few years to begin claiming can have a bigger impact on your benefits than you may think. Say you've worked at least 35 years and have also earned the maximum taxable earnings limit consistently throughout your career.
If you chose to begin claiming Social Security at age 65, you'd earn $2,841 per month in benefits. But by waiting until age 70, you'd collect the maximum $3,895 per month.
In other words, by waiting just five more years to begin claiming, you could boost your benefit amount by nearly $1,000 per month for the rest of your life.
What if you're unable to reach these goals?
Earning the maximum benefit amount is tough, and the majority of workers can't afford to reach all three of these goals. The good news, though, is that even small efforts to increase your benefit amount can pay off.
For example, if you can't reach the maximum taxable earnings limit, finding ways to boost your income even slightly can still increase your benefit amount. Or if you can't afford to wait until age 70 to begin claiming benefits, delaying as long as possible will still result in larger checks each month.
Not everyone will be able to achieve $3,895 per month in benefits. But by taking small steps to increase your benefit amount, you can earn more than you may think.