After some of the highest levels of inflation seen in 41 years, the Social Security Administration (SSA) raised Social Security benefits by 8.7% this year, in accordance with the program's annual cost-of-living adjustment (COLA).
That also pushed the maximum monthly Social Security check up by $361 to $4,555, or $54,660 per year.
But obtaining the maximum Social Security check is no easy task, so if you are determined to get it when you eventually claim benefits, you'll want to keep track of your progress very carefully.
Length of career
The SSA bases a retiree's benefits on the number of years worked, so staying on top of this throughout your career is critical.
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The first step in getting the maximum Social Security check is making sure you work for at least 35 years. This is the number the SSA uses to calculate your primary insurance amount (PIA), or the benefits a retiree is entitled to at their full retirement age (FRA). For people born in 1960 or after, the FRA is 67.
But this is just the first step toward receiving the maximum check. Retirees can begin claiming Social Security as early as the age of 62 and as late as age 70. However, there is a penalty for claiming Social Security early, and retirees can actually increase their benefits by putting them off later.
As you might expect, if you want the maximum $4,555 monthly check, you'll need to delay claiming benefits until 70. For each year a retiree delays, their benefits are increased by 8% annually. So if you were born in 1960 or later, you can boost your benefits by 24% by waiting until 70, which would allow you to capture the maximum check.
The tricky part...
While working 35 years and delaying benefits till 70 are critical if you plan to claim the maximum $4,555 monthly check, there is another key metric retirees must track: Their earnings. This is where things get tricky.
In order to qualify for the maximum Social Security check, retirees must make the maximum amount of earnings subject to taxation. The SSA largely funds the program with a payroll tax of 6.2% on individuals and employers and 12.4% on self-employed individuals. However, the Social Security tax is only applied to earnings up to a certain threshold known as the benefit or wage base. In 2022, the benefit base was $147,000. This year, the benefit base rose to $160,200.
Not only are these salaries of high-net-worth individuals, but as we saw this year, the benefit base can rise significantly at times. So workers need to keep up, which isn't always easy because wage growth doesn't always keep pace with inflation.
The idea is that if you pay the maximum amount of Social Security taxes every year, you will get the maximum amount out of the program. But if your earnings don't hit the benefit base for just one of your 35 years of qualified earnings, you will no longer be able to qualify for the maximum $4,555 check.
Difficult to achieve but important to track
Given what a retiree needs to do to qualify for the maximum $4,555 monthly Social Security check, it goes without saying that this is not easy to achieve. You need to work 35 years, delay benefits to age 70 (if born in 1960 or after), and make the equivalent of benefit base for at least 35 years.
But you should still track all of these things, because you can still increase your benefits by working longer and making higher earnings. So you'll at least want to be aware of where you stand as you get closer to retirement.
