Social Security is a lifeline for millions of older adults. In fact, 41% of baby boomers expect their benefits to be their primary income source in retirement, according to a 2023 report from the Transamerica Center for Retirement Studies.
The average retired worker collects around $1,800 per month from Social Security as of October 2023. However, starting in 2024, the maximum you can receive in benefits will be a whopping $4,873 per month.
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To achieve the maximum payments, there are a few requirements you'll need to meet. The length of your career and the age you begin claiming will affect your benefit amount, but your salary will also play a major part. Here's exactly what it takes to reach the $4,873 max benefit in 2024.
Step 1: Work for at least 35 years
The Social Security Administration calculates your benefit amount by first taking an average of your wages over the 35 highest-earning years of your career. That number is then run through a complex formula to account for cost-of-living changes, and the result is your basic benefit amount.
To reach the maximum payments, you'll need to have worked for at least 35 full years before you start taking benefits. If you haven't worked that long, you'll have zeros added to your earnings average for every month under 35 years you've worked, which will reduce your benefit amount.
Step 2: Hold off on claiming benefits
Your basic benefit amount, or your benefit based on your career earnings, is the amount you'll receive if you file at your full retirement age (FRA). Your FRA will depend on your birth year, but it's 67 years old for anyone born in 1960 or later.
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You can begin claiming before or after your FRA, but it will affect your monthly payments. File as early as possible at 62, and your benefits will be permanently slashed by up to 30%. To receive as much as possible from Social Security, you'll need to wait until age 70 to start taking benefits.
The age you begin claiming will have an enormous impact on your monthly benefit. Even if you meet all the other requirements for the maximum benefit amount, if you file at age 67, the most you can receive is $3,911 per month. If you claim at 62, the max benefit is just $2,710 per month -- a whopping $2,163 per month less than you'd receive at age 70.
Step 3: Consistently reach the wage cap
Finally, your salary is an important piece of the puzzle. The maximum taxable-earnings limit, or wage cap, is the highest income subject to Social Security taxes. The closer you can get to this limit, the more you'll receive in benefits. Once you pass this cap, your income will no longer affect your benefit amount.
The wage cap changes from year to year to account for inflation adjustments. In 2023, it's $160,200 per year. Next year, though, it will be going up to $168,600 per year.
To reach the maximum payments, you'll need to have been consistently reaching the wage cap throughout your career. For context, if you began your career 35 years ago in 1988, the wage cap back then was $45,000 per year.
What to do if you're off track
If your salary is falling short of the wage cap, that's OK. The vast majority of people will not be able to reach the maximum benefit, as it's simply not designed to be attainable for the average worker. But you can still take steps to increase your benefit amount.
The closer you can get to each of these three steps, the more you'll receive from Social Security. For example, maybe you can't delay benefits until age 70, but you can wait until age 67. That alone could boost your payments by hundreds of dollars per month. Or perhaps you can't earn $168,600 per year, but you can increase your income slightly. That will also result in larger checks.
Achieving the maximum $4,873 monthly payments is incredibly difficult, but that doesn't mean you can't still increase your benefit amount. Even small steps can go a long way toward boosting your payments, setting you up for a more financially secure retirement.
