In 2023, some retirees will get monthly checks from the Social Security Administration that give them $4,555 in retirement income. This is the largest possible Social Security retirement benefit on offer, and unsurprisingly only a select few will see so much money land in their bank accounts from Social Security each month.
So will you be eligible for such a large payment? Here's how you can find out.
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1. What will you earn over your career?
The $4,555 monthly Social Security check is available to people who have very high earnings, because Social Security benefits are calculated based on income earned.
Every dollar you earn up to a "wage base limit" is taxed by Social Security each year, and is included when your benefits are calculated. The income that's taxed by Social Security is adjusted for inflation, and your average wage is calculated. You then get benefits equal to a percentage of this average wage.
The wage base limit is $160,200 in 2023 and is the inflation-adjusted equivalent of that each year. Those who receive the maximum $4,555 must earn an income equal to (or above) the wage base limit in every year that's included when their benefits are calculated. This is the only way to earn the maximum possible average wage, which in turn results in the maximum possible retirement benefit.
2. How long will you work?
Social Security's benefits formula calculates average wages over your 35 highest-earning years. This means you must have an income equal to or above the wage base limit for all 35 years that are part of your calculation.
Chances are good there will be some years over your career that you do not earn $160,200 (or the inflation-adjusted equivalent of it). This often means you end up having to work more than 35 years to stand a chance at the maximum $4,555 benefit. If you made less than the wage base limit for the first 10 years of your career, then you'd have to work at least 45 years so you could make sure that initial decade is not counted in your benefits formula.
3. When will you claim Social Security benefits?
If you max out your average wage and are on track for the highest possible standard benefit because of it, you will then need to take an additional step to increase this benefit to get the $4,555 maximum Social Security check: You will have to wait until age 70 to start getting retirement income from Social Security.
You become eligible for Social Security benefits for the first time at 62. But the max benefit at 62 is just $2,572. That's a far cry from the $4,555 max benefit at 70. The reason it is so much lower is because there's a system of early filing penalties and delayed retirement credits. Early claimers see their standard benefit reduced, while those who delay until 70 will earn delayed retirement credits that increase it.
So unless you're planning to put off getting your first retirement check until 70, you will not be eligible for the $4,555 max benefit -- even if you did earn at least the wage base limit for a full 35 years of your career.
Since your benefit is likely to be far lower, it's important to visit mySocialSecurity to get a realistic estimate of the income you can expect. Then make your retirement plans based around that number, with the goal of having a hefty savings account to supplement Social Security and give you the money you need in your later years.
