In 2023, the maximum monthly Social Security benefit for retirees is $4,555. While the Social Security Administration doesn't make figures readily available that show how many people actually receive this amount, suffice it to say that squeezing $4,555 a month out of Social Security would put you in an ultra-elite status. As of July, the average monthly benefit for retired workers was just $1,838.
If you're hoping to score Social Security's biggest benefit someday -- or you simply want to maximize your Social Security benefit -- you'll need to start planning long before retirement. Here are four things to do while you're still working.
Image source: Getty Images.
1. Choose a high-paying profession
This one may sound like a no-brainer, but if you want to get more money out of Social Security when you retire, you need to pay lots of money into Social Security while you're still working.
Your benefit is based on your inflation-adjusted average income during your 35 highest-earning years. Essentially, you'd need to earn at least the maximum amount of annual income subject to the Social Security wage tax for at least 35 years. This number is adjusted annually, but in 2023, it's $160,200. Earnings above that level aren't subject to the wage tax -- but they don't increase the size of your retirement benefit, either.
Falling short of the taxable maximum for just a year or two of your 35 top-earning years will prevent you from collecting Social Security's biggest checks.
Also note that earning above this amount in one year won't help you offset a lower-earning year. If you earn $200,000 in 2023, you'll only pay Social Security taxes on $160,200 of it, and that $160,200 figure will be the one that is factored into your benefit calculation later.
2. Don't plan on retiring early
If you don't work and earn income for at least 35 years, you'll have some years entered as "$0" in Social Security's benefit formula. That means you won't be eligible for the maximum benefit.
But it's also likely that you'd need to work more than 35 years if you want $4,555 a month (or the equivalent whenever you choose to retire). Most people aren't top earners when they begin their careers. So there's a good chance you'd need to replace some lower-earning years from earlier on with some higher-earning ones later to collect the biggest possible checks.
3. Delay filing for Social Security until you turn 70
You can start collecting Social Security once you turn 62, but your benefit will be 30% lower than it would be if you'd waited until what the government designates as your "full retirement age." (For anyone born in 1960 or later, that will be 67.) Waiting beyond full retirement age to start collecting gives you the opportunity to earn an extra 8% a year in delayed retirement credits -- until you reach 70. At that point, your benefit caps out.
You'll need every one of those delayed retirement credits to collect Social Security's largest benefits. If you take your first payment when you're 69 years and 11 months old, you'd still be guaranteed to fall short of the maximum.
4. Save a lot in your retirement accounts
A lot of things can happen that may result in you needing to start taking Social Security before you're 70. Maybe you won't be able to keep working as long as you hoped, or you might face substantial medical expenses. If you want to maximize your Social Security benefits, giving yourself a financial cushion -- both in retirement accounts and in an emergency fund -- can help you avoid starting to take benefits earlier than you intended.
Of course, the irony here is that if you have a giant nest egg, you won't be as dependent on your Social Security checks in retirement. So you'll be able to afford to start taking benefits earlier at lesser monthly amounts.
Don't count on the maximum Social Security benefit
Very few people can expect to receive Social Security's maximum benefit. But that's OK. If you save consistently for retirement, you won't need to squeeze every last possible dime out of the government's benefit program.
Whether you're aiming for the biggest Social Security benefit available or simply seeking to maximize your benefit to the degree that's possible in your situation, the action plan is the same: Boost your earnings if you can, try to work longer, and delay collecting Social Security for as long as possible.
And above all, recognize that Social Security wasn't meant to be a person's sole source of income in retirement -- it's intended to supplement your retirement savings. That's why it's essential to start investing in your nest egg as early as possible, and set money aside for your golden years consistently during your working years.
