The countdown is on. It's only a matter of days before Social Security benefits will increase. While every retiree who receives Social Security will enjoy a nice raise, some will make more than others.
The maximum monthly Social Security retirement benefit currently stands at $4,194. That amount will rise to $4,555 in 2023. Want this max Social Security benefit? Here's the salary you need.
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A not-so-simple answer
If you're retiring in 2023, your salary will need to be $160,200 to pull in the maximum Social Security retirement benefit. That's the highest amount for which Social Security taxes will be payable.
But making $160,200 over the next year won't be enough by itself. The Social Security Administration (SSA) uses your highest 35 years of earnings to calculate your retirement benefit.
No, you don't have to make at least $160,200 for 35 years during your career. The Social Security payroll tax cap has changed significantly over time. Because of this, though, there isn't just one salary level you need to make to receive the max $4,555 monthly benefit. Instead, there are 35 different salary levels you must have achieved in the past.
The following table shows the maximum amount taxed for Social Security for each year going back to 1973. You can see for yourself if you earned enough during 35 years to receive the maximum Social Security retirement benefit.
| Year | Earnings | Year | Earnings |
|---|---|---|---|
| 1973 | $10,800 | 1999 | $72,600 |
| 1974 | $13,200 | 2000 | $76,200 |
| 1975 | $14,100 | 2001 | $80,400 |
| 1976 | $15,300 | 2002 | $84,900 |
| 1977 | $16,500 | 2003 | $87,000 |
| 1978 | $17,700 | 2004 | $87,900 |
| 1979 | $22,900 | 2005 | $90,000 |
| 1980 | $25,900 | 2006 | $94,200 |
| 1981 | $29,700 | 2007 | $97,500 |
| 1982 | $32,400 | 2008 | $102,000 |
| 1983 | $35,700 | 2009 | $106,800 |
| 1984 | $37,800 | 2010 | $106,800 |
| 1985 | $39,600 | 2011 | $106,800 |
| 1986 | $42,000 | 2012 | $110,100 |
| 1987 | $43,800 | 2013 | $113,700 |
| 1988 | $45,000 | 2014 | $117,000 |
| 1989 | $48,000 | 2015 | $118,500 |
| 1990 | $51,300 | 2016 | $118,500 |
| 1991 | $53,400 | 2017 | $127,200 |
| 1992 | $55,500 | 2018 | $128,400 |
| 1993 | $57,600 | 2019 | $132,900 |
| 1994 | $60,600 | 2020 | $137,700 |
| 1995 | $61,200 | 2021 | $142,800 |
| 1996 | $62,700 | 2022 | $147,000 |
| 1997 | $65,400 | 2023 | $160,200 |
| 1998 | $68,400 |
Data source: Social Security Administration.
Another key prerequisite
There's another key prerequisite to receiving the max Social Security retirement benefit that you need to know about. You can't retire early at 62. You can't even retire at your full retirement age, which is 67 for anyone born in 1960 or afterward. To make the max $4,555 per month, you must wait until age 70 to claim your Social Security retirement benefits.
Many Americans don't hold off until age 70, though. Only 10.2% do, according to a paper recently published by the National Bureau of Economic Research (NBER). That's usually not the best financial move. In fact, the NBER study found that claiming Social Security retirement benefits before age 70 resulted in a median lifetime loss of more than $182,000.
The maximum might not be enough
Aiming to receive the maximum Social Security retirement benefit is a laudable goal. However, the maximum still might not be enough to retire comfortably. The $4,555 maximum monthly benefit for 2023 amounts to $54,660 per year. That's only 34% of the $160,200 salary mentioned earlier.
The reality is that most Americans will need to save for retirement in other ways instead of depending solely on Social Security. It's wise to start saving sooner rather than later. Regardless of when you plan to retire, the countdown is on.
