When planning to collect stable retirement income, Social Security naturally rises to the top of retirees' minds. To collect the maximum check in retirement, you'll need to check three major boxes throughout your working career. Regardless, focusing on increasing your monthly check -- even if you don't end up earning the maximum -- is a smart idea.
Here, we'll briefly review the three major actions that lead to a $4,555 monthly Social Security benefit.
Earn the maximum taxable wage base
The first step in achieving the maximum monthly payout for Social Security is to earn a substantial amount -- consistently -- throughout your working career. The maximum taxable wage base is the level of earnings at which Social Security taxation stops; if you're able to earn at least the taxable wage base, you'll earn the maximum Social Security credit for the year in question.
In 2022, the maximum wage base for Social Security was $147,000 in 2022, and it will sharply rise to $160,200 in 2023. According to the Social Security Administration ("SSA"), a mere 6% of workers earn the taxable wage base in any given year, so don't fret if you're earning less right now.
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Have a career of at least 35 years
Not only will you need to be a high earner, but you'll also need to be one for at least 35 years. Recall that Social Security calculations take into account your highest 35 years of earning; to achieve the highest available payout, you'll need to be at the top of the earning pyramid for over three decades. Specifically, you'll need to earn at least the maximum taxable wage base for 35 years, although the years can be non-consecutive.
If you're in your early 60s, don't feel as though you have no control when it comes to increasing your potential Social Security payout. Adding three to five additional years of highly paid work can go a long way even if you're nearing retirement, as these additional years of higher earning can replace lower-earning years of minimal or no work earlier in your life.
Delay filing for benefits until age 70
If you've managed to earn the maximum wage base for 35 years, you're already wildly successful on a relative basis. But to earn the maximum monthly Social Security benefit, you'll also need to wait until age 70 to finally file a claim for benefits. This may or may not be a possibility for you depending on a variety of financial and non-financial factors.
Delaying Social Security is what gives your benefit check an extra boost: waiting from Full Retirement Age ("FRA") to age 70 can mean 30% more in your pockets every month. Filing at age 70 represents a 48-month delay, and retirees are appropriately rewarded for not collecting benefits as soon as they're eligible.
Focus on what you can control
Depending on your age and income, you may be in a position to meaningfully increase your Social Security check by either earning more, working longer, delaying your claim for benefits, or employing a combination of all three.
Even if you're not able to lock in the highest monthly check for retirement, consider the ways in which you can increase your benefit by knowing how the system works and acting accordingly.
The decision to take Social Security is a complicated one that often involves both financial and non-financial considerations. Be sure to learn how the system works and discuss your options with your family and/or a qualified financial planner before going ahead with your claim.
