Since its inception, Social Security has been a pivotal part of many Americans' retirement planning. After decades of paying Social Security taxes, it's a way for retirees to reap the benefits with a safety net of income in their golden years.
As people near retirement, it's common to wonder what role Social Security will play in your retirement, whether it will be a little, most, or all of your income. For the most part, your Social Security benefit correlates with your income for your working years.
While making yourself eligible for the maximum benefit isn't easy, it's doable. Here are the max payouts for retirees by age.
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The important role that your full retirement age plays
One of the most important numbers in Social Security is your full retirement age. That's the age when you're eligible to receive your full Social Security benefit, and it's based on your birth year:
| Birth Year | Full Retirement Age |
|---|---|
| 1943 to 1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
Data source: Social Security Administration.
Much of the reason your full retirement age is so important is that it's the baseline used for Social Security to calculate your benefit if you decide to claim before or after your full retirement age.
Claiming benefits early reduces them by five-ninths of 1% each month within 36 months and five-ninths of 5% for each additional month after 36. If your full retirement age is 67 and you claim benefits at 62 (the earliest age you can claim), they'll be reduced by 30%. If you were due to receive $1,500 at 67, you'll receive $1,050 at 62.
The calculations for delayed benefits are more straightforward: two-thirds of 1% each month past your full retirement age. It works out to 8% annually and 24% total if your full retirement age is 67 and you delay benefits until 70 (they don't increase after that).
The most important step is to be a high earner
Social Security calculates your benefits using the average income during the 35 years you earned the most. The wage base limit is the highest amount of your earnings subject to Social Security taxes each year, so it's also the biggest factor in your benefit.
The wage base limit for 2024 is $168,600, so any money earned over that is free from Social Security's tax. It typically increases yearly to account for inflation, so it's essential to consistently monitor your earnings relative to these limits, especially if you're aiming for the maximum benefit.
To get the maximum payout for a given age, your earnings in the 35 years Social Security uses to calculate your benefit must be at the wage base limits, at minimum. If you crossed the wage base limit 34 times and earned less than $168,600 in 2024, you wouldn't get the maximum benefit if 2024 was a year used in the calculation.
The highest payouts by age
The maximum monthly benefit for someone claiming at age 67 in 2024 is $3,911. Here's what the maximum monthly benefit would be for those claiming at different ages in 2024, according to the Social Security Administration:
| Age | Maximum Benefit |
|---|---|
| 62 | $2,710 |
| 65 | $3,426 |
| 66 | $3,652 |
| 67 | $3,911 |
| 70 | $4,873 |
Source: Social Security Administration. Calculations by author. Rounded to the nearest dollar.
While these monthly benefits seem enticing, it's worth pointing out that only a relatively small portion of the population is eligible to receive them. According to Social Security, only around 6% of the U.S. population earns above the wage base limit in a given year. Even fewer are doing it for 35 years over their career.
Don't forget to check your earnings record
Social Security records all your earnings and makes this information available to you on its website. After creating an account, you can access your earnings record, which will give you an estimated monthly benefit based on when you claim relative to your full retirement age.
Checking your earnings record regularly leading up to retirement can be a great tool for planning. The better the idea you have of your financial situation in retirement, the better prepared you can be to make informed decisions.
You may find that your projected benefit is lower than expected and push back the time when you claim. You could also notice you'll receive more than expected and push back the time when you begin 401(k) withdrawals, for tax reasons. Everyone's situation is different; what matters is understanding your financial situation and what works best for you.
