For those lucky enough to rake in Social Security's maximum $4,194 monthly checks, retirement looks pretty good. They can count on over $50,000 in annual benefits, plus whatever they've saved on their own during their careers.
The requirements to earn this jaw-dropping benefit are pretty straightforward, but only the richest seniors manage to pull it off. If you have your heart set on the largest possible checks, here's what you need to do to make it happen.
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1. Work at least 35 years
The government bases your Social Security benefit on your average inflation-adjusted monthly income over your 35 highest-earning years. If you've worked at least that long, the calculation is pretty straightforward. It totals your earnings from those 35 highest-earning years, after making adjustments for inflation, and divides them by 420 -- the number of months in 35 years. The result is your average indexed monthly earnings (AIME).
Those who haven't worked at least 35 years have zero-income years factored into their calculation. Even one of these can shrink your AIME considerably, resulting in a smaller monthly benefit for you.
2. Pay Social Security taxes on the maximum income
Most people pay Social Security taxes on all of their income, but this isn't true for high earners. In 2022, you only pay these taxes on the first $147,000 you make. This limit will rise to $160,200 in 2023.
In order to qualify for the $4,194 benefit, you must earn at least the equivalent of $147,000 in 2022 dollars in at least 35 years. This is why most people don't receive the largest possible checks.
But even if you don't earn enough to get the maximum benefit, anything you can do to boost your income today will still help increase your Social Security checks in the long run. This includes finding a higher-paying job, starting a side hustle, or even working longer.
A lot of people earn more later in their careers than they did starting out. Once they pass the 35-year mark, their earlier, lower-earning years drop out of their benefit calculation and are replaced with more recent, higher-earning years.
3. Delay benefits until 70
You become eligible for Social Security at 62, but claiming at that age can permanently shrink your benefit checks. If you want the amount you've earned based on your work history, you must delay benefits until your full retirement age (FRA). That's between 66 and 67 for today's workers.
Claiming prior to this age shrinks your benefit up to 25% if your FRA is 66 or 30% if your FRA is 67. This doesn't mean signing up early is always a bad choice, though. It can make sense for those with short life expectancies and those who are already retired and in need of some financial assistance.
But those who want the largest possible checks will have to wait a while. Every month you delay increases your benefit a little at a time until you turn 70. Waiting until then adds another 24% to your checks if your FRA is 67 or 32% if your FRA is 66.
Delaying Social Security often leads to a larger lifetime benefit for those who live into their 80s or beyond. But if you plan to do this, you have to be comfortable paying for all of your own living expenses until retirement.
Don't be too discouraged
Claiming the $4,194 maximum Social Security benefit isn't going to happen for most of us. But that's OK. The tips above are useful no matter what your income level. If you haven't already done so, think about when you plan to claim and brainstorm ways to boost your income today so you can claim your largest possible checks when you're ready to retire.
