The size of your Social Security check when you eventually claim benefits will ultimately depend on a variety of different factors including how long you've worked, how much you've made throughout your career, and when you choose to claim Social Security.
Retirees can receive as much as $4,555 in Social Security benefits per month, or $54,660 annually. While this would be a nice amount to help get you through retirement, the reality is that obtaining the maximum Social Security benefit is a fantasy for the vast majority of people. Here's why.
You need to have a very successful career
Certain aspects of claiming the maximum Social Security check are very doable. For instance, one thing people must do is work for at least 35 years because the Social Security Administration calculates the full amount of benefits retirees are entitled to by using a retiree's highest 35 years of earnings. Any years below 35 that a retiree did not work will automatically become a zero, which will hurt a retiree's potential benefits.
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Another thing that retirees need to do in order to claim the maximum monthly check is delay their benefits. Retirees can claim benefits as early as the age of 62 and as late as age 70.
While there really is no right answer as to when to claim benefits and the choice should be made based on your individual situation, if you can afford to delay benefits, then you probably should. Plus, it's the only way to qualify for the maximum check. Delaying benefits past your full retirement age (FRA), which is 67 for those born in 1960 or later, increases your benefits by 24% if you wait until 70 to claim.
But ultimately, what makes the maximum Social Security check so difficult to obtain has to do with the fact that the amount of benefits you're entitled to is based on your earnings over your career.
The SSA pays for benefits largely through a payroll tax: 6.2% for individuals and employers and 12.4% for self-employed individuals. But the SSA is only allowed to tax annual earnings up to a certain amount. This number is referred to as the benefit base. In order to qualify for the maximum Social Security check, retirees need to have earned the benefit base (or more) for each of the 35 years in the calculation of their benefits.
The benefit base is typically the salary of a high-net-worth individual, and it adjusts higher each year with inflation. For instance, 35 years ago in 1988, the benefit base was $45,000. This year, it's $160,200.
Not impossible but very difficult
Obviously, it's not impossible to earn the maximum Social Security check, but there is a very high bar in that it requires a person to earn that hefty salary for at least 35 years, or the bulk of an average person's career.
Obtaining the maximum Social Security check is not always in your control, either. Sometimes, whether due to a health or financial issue, it may make sense to start claiming benefits at the age of 62, which also takes the maximum check off the table.
In general, even though the $4,555 monthly check is really a fantasy for most retirees, the best way for people to maximize their Social Security is to work for at least 35 years, increase their earnings over time, and delay benefits until 70.
