Millions of seniors today get a monthly benefit from Social Security. And while that benefit, ideally, will be only one of several retirement income sources you have, you may be motivated to get as much money from Social Security as you can.
In 2023, the average senior on Social Security collects $1,827 a month. But you may be eligible for a lot more money than that.
In fact, some seniors this year are looking at a monthly benefit of $4,555, which is the maximum Social Security will pay. Here's how to score a benefit that high.
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Step 1: Work a minimum of 35 years
The Social Security Administration takes your 35 highest-paid years in the labor force into account when calculating your monthly benefit. To be eligible for $4,555 a month, you'll need to have worked for 35 years so that you won't have any $0s in your benefits calculation for missing years.
Step 2: Earn an income equivalent to or greater than the wage cap
Did you know that there's a wage cap when it comes to Social Security taxes? Workers pay taxes on their earnings for Social Security purposes only up to a certain point, and that level varies from year to year. In 2023, the wage cap is $160,200, so income beyond that threshold isn't taxed. But to claim the maximum monthly Social Security benefit, your earnings must reach or exceed the wage cap for 35 years.
Step 3: Delay your Social Security claim until age 70
You're entitled to your complete monthly benefit based on your earnings history once you reach full retirement age, which is either 66, 67, or somewhere in between, depending on when you were born. Each year you delay filing past full retirement age, your benefits grow 8%. To snag the maximum monthly Social Security benefit, you must hold off on filing until age 70.
Most seniors won't get the maximum monthly benefit
Collecting $4,555 from Social Security every month during retirement might seem nice. But for most seniors, it's unrealistic because many struggle to earn a high enough income to qualify for the maximum benefit.
If the monthly Social Security benefit you're eligible for isn't anywhere close to $4,555 but rather more in line with the current monthly average of $1,827, it doesn't mean you're doomed to a cash-strapped retirement. Building yourself a solid nest is a great way to compensate for getting less income from Social Security. And even if you've largely missed the boat there, you're not out of options.
For one thing, there's always part-time work in retirement. And the gig economy makes it easy to earn an income at a pace that works well for you. You could also look into monetizing your home, whether by renting out a finished basement or even a parking spot in your driveway. There are lots of ways to generate retirement income outside of Social Security, so even if your monthly benefit isn't as high as you'd like it to be, all is far from lost.
