You'll often hear that you shouldn't plan to retire on Social Security alone, because your benefits most likely won't be enough to cover all of your bills. But what if you're eligible for a monthly benefit of $4,194?
That's the highest monthly benefit you can collect this year. And in that case, you're looking at an annual income of just over $50,000.
To be clear, it's still a good idea to build your own nest egg on top of Social Security. But you have to admit, a monthly benefit of $4,194 could go a long way.
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But is that a monthly benefit you should expect to collect? Maybe -- or maybe not. Here's what it takes to score a $4,194 benefit.
1. Have high earnings
The monthly Social Security benefit you get to collect in retirement will hinge on your earnings during your 35 highest-paid years in the labor force. And you'll need pretty high earnings to snag the program's maximum monthly benefit.
Each year, there's a wage cap put in place that limits the amount of income that's subject to Social Security taxes. Right now, that cap sits at $147,000, but it changes from year to year.
Earnings beyond that point aren't taxed for Social Security purposes, but they also don't count toward calculating your future benefit. But to be eligible for $4,194 a month, you'll need to have a history of earnings that's met or exceeded the wage cap for at least 35 years.
2. Delay your Social Security filing
You're entitled to your full monthly Social Security benefit based on your earnings history once you reach full retirement age, or FRA. FRA kicks in at 66, 67, or somewhere in between, depending on when you were born.
For each year you delay your benefits beyond FRA, they grow by 8%, up until age 70. And if you want to snag the maximum monthly $4,194 benefit, you'll need to postpone your Social Security filing until your 70th birthday.
What if you're not on track for a $4,194 monthly benefit?
To be clear, most Social Security beneficiaries will not be eligible to collect $4,194 a month. But if that's the case for you, don't sweat it.
First of all, if you're many decades into your career and know you won't qualify based on your earnings history, there's really not too much you can do about it. You can't go back in time and earn a higher salary. But what you can do is work on boosting your income going forward to set yourself up with as generous a benefit as possible.
Furthermore, if you want to get a nice Social Security paycheck, aim to delay your filing until age 70. Doing so may require you to work longer, but you'll be rewarded with a higher monthly benefit for life.
Finally, make an effort to save nicely for retirement so you're not too dependent on Social Security. Even if you manage to snag $4,194 a month, you might still need more income than that to maintain the lifestyle you want once you stop working.
Collecting $4,194 a month from Social Security may be nice. But if it's not in the cards, your next best bet is to do what you can to set yourself up with a solid retirement income stream.
