In 2023, the maximum Social Security benefit at age 62 is $2,572. But this is not the maximum benefit any retiree could receive. The absolute highest amount Social Security sends out is $4,555 -- $1,983 per month more.
Not everyone will be able to end up with the maximum benefits and get almost $2,000 more in your pocket to enjoy your retirement with this simple strategy. However, nearly anyone can make their work benefits get a whole lot bigger. Here's what you would need to do.
Image source: Getty Images.
Be strategic about when you make your benefits claim
If you're wondering why some retirees have a maximum benefit of $4,555 while others come in $1,983 lower at just $2,572 at most, the reason is simple: It has to do with when you claim your first Social Security check.
You get to start your retirement benefits between the ages of 62 and 70. But you won't get the same amount in your monthly check if you start Social Security at a younger age rather than waiting until you're older.
The system is designed to equalize lifetime benefits regardless of your claiming age. So early filers get more payments, but each one is much smaller. And late filers get large payments, but don't receive as many checks over their lifetime.
If your goal is specifically to get the largest possible monthly check, you need to wait until 70 to avoid early filing penalties that reduce your standard benefit. If you do that, you will also earn delayed retirement credits.
As you can see, the impact is significant. The early filing penalties and delayed retirement credits explain why the maximum benefit at 70 is $1,983 higher than the max benefit at 62.
Should you delay your benefits claim to get a bigger Social Security check?
An extra $1,983 per month sounds good, but the specific boost to your benefit is going to vary based on what your standard benefit is.
If your career-average wages entitle you to a standard benefit of $1,800 per month and your full retirement age (the age when you become eligible for that standard benefit) is 67, then claiming Social Security at 62 would reduce your check to $1,260. Delaying it to 70, on the other hand, would increase it to $2,232. So your benefits increase due to delay would be $972. That's a respectable increase even if it's not $1,983 per month.
You also need to think about the opportunity cost of that delay. If you give up eight years of potential income, you would miss out on hundreds of thousands of dollars. In the example given in the previous paragraph, you would pass up eight years of getting $1,260 per month deposited in your bank account so would miss out on $120,960. The extra $972 in your checks you start getting at 70 would make up for that amount over time -- but only if you lived another 10.37 years. Not everyone will live into their 80s, so you could end up with less money in your lifetime.
Ultimately, it comes down to what makes sense for you. If you really want a big monthly Social Security check, or want to maximize survivor benefits for your spouse (who gets to keep the larger of the two checks coming into the household after your death), then you should delay.
But if you hope to retire early and need Social Security to do it, putting off your payments for a higher retirement check later may not always be worth it -- even if the extra amount you would get sounds like a huge sum.
