The age at which you file for Social Security benefits will have a major impact on the amount you receive each month. While you can receive larger monthly payments by delaying benefits, many workers choose to file as early as possible at age 62. That can be a smart strategy in many cases, and there are several advantages to claiming early.
You can still earn a substantial amount in benefits by claiming early, too. In 2022, the maximum you can collect by filing at age 62 is $2,364 per month -- which is significantly higher than the $1,557 per month average benefit amount. Here's what it takes to achieve the maximum monthly payments.
How the length of your career affects your benefits
One of the most important factors when it comes to your benefit amount is the number of years you've worked. Most people become eligible for Social Security retirement benefits once they've earned income for 10 years, but you'll need to work for at least 35 years to receive the maximum benefit amount.
When calculating the amount you'll receive, the Social Security Administration takes an average of your wages throughout the 35 highest-earning years of your career. That number is then adjusted for inflation, and the result is the amount you'll collect if you claim at your full retirement age (FRA).
If you work more than 35 years, only the years with the highest earnings will be counted -- which could increase your average and result in a higher benefit amount. If you work fewer than 35 years, however, you'll have zeros added to the equation, which will bring down your average.
How much you'll have to earn to reach the maximum benefit amount
Your income is another crucial factor in reaching the highest benefit amount. The more you're earning, the more you'll be eligible to collect in benefits -- up to a certain point.
Once you surpass the maximum taxable earnings limit (which is the highest income that's subject to Social Security taxes), a higher income won't result in additional benefits. To earn this maximum benefit amount, then, you'll need to reach the maximum taxable earnings limit.
This limit changes from year to year to account for inflation. This year, the limit is $142,800 per year, but in 2022, it will increase to $147,000 per year. If your goal is to collect the maximum $2,364 per month at age 62, you'll need to be reaching these limits consistently throughout your career.
What if your earnings are falling short?
If you're earning enough to reach the maximum benefit amount, that's fantastic. But the average worker will struggle to reach the income limits, and not everyone can afford to work 35 years before claiming.
The good news is that if you're willing and able to delay benefits past age 62, you can earn closer to the maximum benefit amount.
Say, for example, you have an FRA of 67 years old, and by claiming at that age, you could receive $1,600 per month. If you were to claim early at 62, your benefits would be reduced by 30%, leaving you with $1,120 per month. But if you delay benefits until age 70, you'd receive your full benefit amount plus an extra 24%, or $1,984 per month.
Not everyone will be able to wait until age 70 to file for benefits. But if you're unable to reach the maximum benefit amount, delaying Social Security is one of the best and easiest ways to boost your benefits.