Thanks to a large 8.7% increase in Social Security benefits this year, the maximum monthly check that retirees can claim is now $4,555 per month, or $54,660 annually.
But don't get too excited just yet, because qualifying for this amount is no easy task. It depends on a variety of factors, including how long your career was, how much you earned, and when you decided to claim benefits. In fact, claiming the maximum $4,555 check is really a fantasy. Here's why.
A lot of things need to go right
Social Security is a complicated program and therefore there are complicated rules. The first thing retirees need to do in order to have a chance at claiming the max benefit is work for at least 35 years. That's because the Social Security Administration (SSA) averages your 35 highest-earning years to calculate your primary insurance amount (PIA) -- the benefits you're entitled to at your full retirement age (FRA). For those born after 1960, the FRA is 67.
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So, if you worked fewer than 35 years, you can pretty much kiss any chance of getting the maximum check goodbye. For any year below 35 that you didn't have earnings for, the SSA will put zero as your earnings, which will significantly hurt your PIA.
The next thing retirees must do to claim the max benefit check is to make sure they delay claiming benefits for as long as possible. Retirees have the option to start claiming benefits as soon as the age of 62 or as late as the age of 70. However, retirees could see their benefits greatly reduced if they claim prior to their FRA, because there is a penalty for claiming benefits early.
On the other hand, retirees are rewarded for delaying benefits. For each month past the FRA that retirees delay benefits, their benefits will grow by 2/3 of 1% each month. That equates to 8% per year and a 24% boost to benefits if retirees delay until 70, which is the latest age they can put off claiming benefits.
The last and arguably hardest thing retirees must do to obtain the max Social Security check is be a high-income earner over the course of their career. Social Security is largely funded by a payroll tax: 6.2% for individuals and employers, and 12.4% for self-employed individuals. But the government can only apply the Social Security tax to a certain amount of a worker's earnings, a number known as the benefit base. In 2022, the benefit base was $147,000. This year it's $160,200.
The benefit base rises along with the increase in benefits, which is largely due to inflation. To qualify for the maximum check, retirees need to have made the benefit base or higher for at least 35 years of their career.
It's very difficult to max out Social Security
While achieving the benefit base is not impossible, it is very, very difficult. Working 35 years over a career is certainly doable, but in many cases, retirees can't afford to hold off claiming benefits until 70 because of their health and financial situation.
Being able to make the equivalent of the benefit base consistently for 35 years is also an extremely difficult task. That's why many view the $4,555 maximum Social Security check as a fantasy.
