Even if you are far away from retirement, it's never too early to start thinking about Social Security. That's because when determining your benefits, which could serve as a key source of supplemental income when you retire, the Social Security Administration (SSA) looks at your career holistically, and there's a lot that can impact your ability to earn the maximum monthly $4,555 Social Security check. If you want to earn as much in Social Security benefits as possible, here are three things to do that will help.
Image source: Getty Images.
1. Work a long time
The amount of benefits that Social Security retirees receive at their full retirement age (FRA) is called the primary insurance amount (PIA). The FRA is 67 for those born in 1960 or after. To calculate the PIA, the SSA uses your earnings for the highest 35 years of your career, so you must work for 35 years if you are going to qualify for the maximum check. If you work fewer than 35 years, the SSA will put in a zero for the years you don't work, which will significantly hurt your overall benefit amount.
2. Delay claiming benefits for as long as possible
Deciding when to claim benefits should really depend on your financial and health status, and there are certainly situations when it makes sense to claim Social Security early. But if you can, delaying benefits for as long as possible is also a necessity if you hope to claim the maximum check.
Retirees can opt to claim Social Security as soon as the age of 62 and as late as the age of 70. But when you claim Social Security early, there is a penalty. For each month you claim benefits prior to your FRA, they will be lowered by 5/9ths of 1% up to 36 months. After this, benefits are lowered by 5/12ths of 1% per month. Basically, if your FRA is 67 and you claim benefits at 62, then you can see your benefits reduced by as much as 30%.
On the flip side, for each month you delay benefits past your FRA, your benefits will increase by two-thirds of 1%. That's an additional 8% per year, and 24% if you wait until 70. You must delay until 70 to have a chance at the maximum monthly $4,555 check.
3. Make a very healthy salary
The last thing workers need to do to claim the maximum Social Security check is make a very healthy salary throughout their careers.
The Social Security program is largely funded by a payroll tax: 6.2% for individuals and employers, and 12.4% for self-employed individuals. But this tax can only be levied each year up to a certain threshold of a person's salary. This number is referred to as the benefit base and it can move each year, depending on inflation. For instance, the benefit base 35 years ago in 1988 was $45,000. In 2022, it was $147,000, and this year it jumped to $160,200.
Retirees must have made a salary equivalent to the benefit base or higher each year for at least 35 years in order to qualify for the maximum check. This is obviously no easy task, because one must essentially be a high-net-worth individual for nearly their entire career.
