If you're a recent college graduate entering the workforce, then Social Security may be the last thing on your mind. Rather, you may be more focused on stretching your salary so it's able to cover your expenses and leftover student debt.
One thing you should know is that the more money you earn in the course of your career, the more money you can expect from Social Security down the line. Whether you'll be able to set yourself up for the maximum monthly benefit, though, will hinge on just how high an earner you are or become.
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It takes a really high wage
The maximum Social Security benefit changes from year to year, but currently, it's $4,555. To score the maximum benefit Social Security is willing to pay, you need to earn a consistently high wage for 35 years and also delay your filing beyond full retirement age.
If you're first entering the workforce now in your 20s, then full retirement age is 67 for you. You're able to delay your Social Security filing until age 70 for a boosted benefit, and it will require that effort to score the maximum monthly benefit.
But let's talk about what it means to earn a high enough wage for the maximum benefit Social Security will pay. That number actually changes from year to year based on inflation. But you should know that this year, it takes a minimum of $160,200 in earnings to score the maximum Social Security benefit. In 2024, it will take $168,600. And you can expect that number to keep going up.
If you're first embarking on your career, you may not be getting paid anything close to $160,200 (or $168,600 for 2024). But you should know that eligibility for the maximum Social Security benefit will hinge on hitting the appropriate thresholds for 35 years in the course of your career. So if your wages aren't so high in your 20s, but they increase notably in your 30s and stay that way through your 60s, it's possible that you'll eventually be eligible for Social Security's maximum benefit.
Most seniors don't get the max
If you're first starting to work and are embarking on a reasonably lucrative career, then there's no reason to write off the idea of one day being able to claim the maximum monthly Social Security benefit. But you should know that most seniors don't manage to achieve that goal.
As such, it's a really good idea to work on building savings throughout your career. Funding an IRA or 401(k) plan consistently could make it so you're able to enter retirement with a nice-sized nest egg. That way, you can set yourself up to live comfortably, even if your monthly Social Security benefit is nowhere close to the max.
There's nothing wrong with dreaming big in the context of Social Security. But it's a good idea to be realistic about the monthly benefit you'll be able to collect. And if you're embarking on a career where wages tend to top out at, say, $80,000, then you shouldn't expect to collect the maximum Social Security benefit down the line. But if you save accordingly, that doesn't have to be a problem.
