The maximum possible Social Security benefit for retirees in 2024 is $4,873 per month. This translates to about $58,500 in annual inflation protected income.
Obviously, most retirees would love to have this much money coming in. But the reality is that very few Social Security beneficiaries get this much -- or anything close to it. As of the latest information from the Social Security Administration (SSA), which is from Nov. 2023, the average monthly benefit for a retired worker is $1,845 per month. Even if we apply the 3.2% cost-of-living adjustment that beneficiaries receive in 2024, we get an average of $1,904 per month, or $22,846 per year.
If you're hoping to max out Social Security, you'll need to earn a high income, but there's more to the story. Here's what it takes to get the maximum possible Social Security benefit, and why most people won't get it.
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The salary you need for the max $4,873 Social Security benefit
Social Security is largely based on your income, but the SSA considers income only up to a certain level. This is also known as the Social Security contribution and benefit base -- workers only pay Social Security tax on income up to this level, and this income level is also the maximum that is considered when calculating the benefits retirees will receive.
For 2024, the contribution and benefit base is $168,600. So, the short answer is that this is the salary you need to max out Social Security.
You'll need to max out in more years than just 2024
One important concept for workers and new retirees to understand is that Social Security considers your 35 highest-earning years. That's in contrast to many public-sector and private pension plans, many of which consider the highest three or five years of an employee's compensation.
To calculate your initial benefit, the SSA examines your entire work record, adjusting each year's earnings for inflation. To get the maximum possible Social Security benefit, you'll need to earn a salary greater than or equal to the contribution and benefit base in at least 35 separate years.
As you might imagine, this isn't too common. According to SSA data, about 6% of workers earn more than the taxable maximum in any given year.
A high income isn't enough
Let's say you max out your Social Security taxable earnings in 35 different years. That still isn't enough to get the maximum benefit all by itself. To truly max out Social Security, you'll also need to wait as long as possible to start receiving benefits. The SSA will permanently increase your benefit by 8% per year beyond full retirement age, so if your Social Security full retirement age is 67, which is the case for all eligible workers born in 1960 or later, waiting until 70 can get you a 24% boost.
This means that not only do you need to be a high earner, but you'll have to wait until age 70 before you claim Social Security. Only 10% of Americans plan to wait until 70 to start their benefits, but even fewer actually do.
The bottom line
In short, in order to get the maximum possible Social Security benefit, you'll need to max out your earnings in 35 different years and wait until 70. Obviously, this combination isn't possible or practical for most Americans, and the vast majority of people don't receive the maximum.
However, by understanding the basics of how your benefit is determined, you can make the best decisions when it comes to maximizing your own benefit before you retire.
