Social Security benefits are intended to supplement retirees' savings and help them cover their daily expenses once they retire. Because people live longer today than they once did and because everything is more expensive, retirees should do everything they can to maximize their Social Security benefits.
The maximum monthly Social Security check is currently $4,555, which equates to $54,660 annually. Here's the salary you'll need to qualify for the maximum when you claim benefits.
But first, do these two things
While the salary you make throughout your career plays a big role in determining how much you can ultimately claim in Social Security, there are other factors retirees need to consider when trying to get the maximum monthly check.
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First, you must work for at least 35 years. The Social Security Administration (SSA) uses your 35 highest years of earnings to calculate your primary insurance amount (PIA), the benefits retirees are entitled to at their full retirement age (FRA), which is 67 for those born in 1960 or later. So, if you don't work a full 35 years, the SSA will put in zero for all the years below 35 that you didn't have earnings, which would significantly affect your PIA in an adverse way.
When you decide to claim Social Security can also greatly affect your benefits. Retirees or those nearing retirement can choose to start claiming benefits as early as age 62 and as late as 70.
But when you claim benefits before your FRA, there is a penalty. When claimed early, your benefits are reduced by 5/9 of 1% for each month before your FRA. However, if you are claiming benefits by more than 36 months in advance of your FRA, then your benefits are reduced by 5/12 of 1% per month. All in all, if your FRA is 67 and you claim benefits at 62, your benefits will be reduced by a whopping 30%.
On the other hand, for each month you delay benefits after your FRA, your benefits will grow by 2/3 of 1%. So, if your FRA is 67 and you wait until 70, you can increase your benefits by 24%.
The salary you need for maximum Social Security
Social Security is largely funded through a payroll tax: 6.2% for employees and employers, and 12.4% for self-employed individuals. The idea is that the more you put into Social Security throughout your career, the more you will get out.
However, workers are only taxed on a certain amount of their annual earnings. This limit is known as the benefit base, and it tends to increase each year along with inflation.
In 2022, the benefit base was $147,000. But this year, it rose to $160,200 due to the high level of inflation seen in 2022, so you'll need to make a healthy salary to be eligible for the monthly maximum Social Security check. To put things into context, the benefit base 35 years ago in 1988 was $45,000, so you need to make a good salary each year and see it rise consistently with inflation every year to qualify for the maximum check.
This is what makes the maximum monthly Social Security check so difficult to achieve. But if you can make the benefit base or more each year for 35 years, and then delay claiming benefits until 70, you'll be able to receive the $4,555 maximum monthly check.
