Social Security benefits make up a significant portion of income for many retirees, so it pays to make sure you're earning as much as possible.
The average retiree collects around $1,657 per month in benefits, according to the most recent data from the Social Security Administration. However, the maximum you can collect in 2022 is $4,194 per month.
Exactly how much you'll collect in benefits depends on several factors. Here's how to tell whether you're on track to earn the maximum monthly payment.
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1. How long have you worked?
The first step to reaching the maximum $4,194 per month benefit amount is to ensure you've worked for at least 35 full years before you begin claiming Social Security.
The Social Security Administration calculates your benefit amount by taking an average of your income throughout the 35 highest-earning years of your career. That number is then run through a complex formula to account for cost-of-living changes, and the result is your basic benefit amount -- or the amount you'll receive if you claim at your full retirement age (FRA).
If you've worked for fewer than 35 years, you'll have zeros added to your average. This will result in a lower average and a smaller monthly payment.
2. What age will you claim?
Your earnings will determine the amount you collect in benefits if you claim at your FRA, but to receive as much as possible, you'll need to delay benefits until age 70.
The earlier you file for Social Security, the smaller each check will be. For instance, even if you were eligible to collect $4,194 per month at age 70, if you were to instead claim at age 65, you'd only receive $2,993 per month. By filing at age 62, you'd receive just $2,364 per month.
Keep in mind that Social Security benefits were designed so that you should, in theory, receive the same amount over a lifetime regardless of what age you claim. By claiming benefits earlier, you'll receive smaller checks but more of them over a lifetime. Delay benefits, and you'll collect fewer checks overall, but each will be larger.
If you want to receive the maximum $4,194 monthly payments, however, you'll need to wait until age 70 to file for benefits.
3. How much have you earned?
Finally, your income will have a significant effect on how much you receive in benefits. To earn the maximum payments, you'll need to be consistently reaching the maximum taxable earnings limit. This is the highest income that's subject to Social Security taxes.
This limit changes most years to account for inflation, and in 2022, it's $147,000 per year. For comparison, 35 years ago in 1987, the limit was $43,800 per year. To earn the maximum $4,194 benefit amount, you'll need to have been reaching these limits throughout the 35 highest-earning years of your career.
Not everyone will be able to reach these limits, and that's OK. The good news is that you can still boost your benefit amount by either working longer, delaying benefits, or increasing your income. Even if you can't work a full 35 years, wait until 70 to file, or earn $147,000 per year. Getting as close as you can to these limits will result in larger checks and a more comfortable retirement.
