For millions of seniors, Social Security is a lifeline. Around 40% of retirees say they rely on their benefits "completely," according to a 2022 survey from The Motley Fool.
However, the average benefit amount in 2023 is around $1,827 per month, which amounts to just under $22,000 per year. As costs continue to rise, it will become more and more difficult to survive on Social Security alone.
It is possible, though, to increase your monthly benefit amount. In 2023, the most you can collect from Social Security is $4,555 per month. Here's exactly how to achieve it.
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1. Work for at least 35 years
To calculate your benefit amount, the Social Security Administration takes an average of your earnings over the 35 years of your career that you earned the most money. That number is then run through a complex formula to account for inflation, and the result is your primary insurance amount (PIA).
If you begin claiming benefits before you've worked 35 full years, you'll have zeros added to your average to account for the time you weren't working -- which will result in a lower PIA. To earn the maximum $4,555 monthly payments, then, you'll need to work for at least 35 years before you start taking benefits.
2. Wait until age 70 to file for benefits
Your PIA is the amount you'll receive if you begin claiming at your full retirement age (FRA). This figure will depend on your birth year, but everyone's FRA will fall between the ages of 66 and 67.
The earlier you begin claiming, the less you'll receive each month. But if you delay claiming benefits until after your FRA (up to age 70), you'll receive your full PIA plus a bonus of up to 32% per month.
Even if you meet all the other requirements for the max Social Security benefit, if you file at age 62, the most you could receive is $2,572 per month. Claim at age 65, and the maximum benefit increases to $3,279. At age 70, you'll be eligible for the full $4,555 per month.
3. Consistently reach the wage cap
In general, the higher your income, the more you'll qualify for in benefits. However, only income up to a certain limit is subject to Social Security taxes. Once you surpass this limit, you won't pay additional taxes, and your future benefit amount will not increase.
This limit changes from year to year to account for inflation, but in 2023, it's $160,200 per year. Any income you earn up to this limit will result in a larger benefit amount. To earn the max $4,555 per month, you'll need to be consistently reaching the wage cap throughout your career.
Again, this limit has shifted significantly over the decades, so you don't necessarily have to earn six figures yearly during your entire career. For context, 35 years ago in 1988, the wage cap was $45,000 per year.
What if you're off track?
In reality, few workers will be able to achieve the maximum benefit amount -- and that's OK. You can still increase your monthly payments by getting closer to any of these three requirements.
For example, maybe you can't delay benefits until age 70, but you can wait until, say, age 67 to file. That alone can potentially boost your payments by hundreds of dollars per month, compared to filing at age 62.
Or perhaps you're not able to reach the wage cap but can increase your income slightly. That, too, can increase your benefits. Even working one or two extra years can give your monthly payments a boost.
Whether or not you're on track for the $4,555 monthly benefit, the right strategy can help you earn more than you might think.
