Social Security: Here's the Biggest Possible Benefit for Retirees at Ages 62, 66, and 70

Most retirees would jump at the chance to increase their Social Security benefit. Inflation has been particularly rough in recent years, and many people have lost confidence in their ability to keep up with rising prices. But studies consistently show that very few Americans know how to increase their benefit. That knowledge gap can lead to lost income in retirement.

Read on to learn how claiming age influences Social Security benefits, and to see the biggest possible benefit for retired workers at ages 62, 66, and 70. I will also discuss the three conditions beneficiaries must satisfy to earn the maximum payout.

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How Social Security benefits are calculated for retired workers

The Social Security benefit awarded to a retired worker depends on three things: work history, lifetime income, and claiming age. The first two variables determine the primary insurance amount (PIA), and the third determines whether the PIA is adjusted for early or late retirement.

Here's how that works:

• Step 1: A formula is applied to the average, inflation-adjusted income from a worker's 35 highest-paid years of employment. If that worker claims Social Security at full retirement age (FRA), their benefit will equal their PIA. But if that worker starts Social Security before or after FRA, their benefit will be adjusted lower or higher, respectively
• Step 2: Workers are entitled to retirement benefits at age 62, but there is a catch: Workers are permanently hit with a reduced benefit if they start Social Security before FRA, meaning they get less than 100% of their PIA. Alternatively, workers are permanently rewarded with an increased benefit if they start Social Security after FRA, meaning they get more than 100% of their PIA. That said, there is no advantage to delaying past age 70.

All three variables -- work history, lifetime income, and claiming age -- play an important role in determining Social Security payouts. But claiming age is particularly important. It is easy to control, and it has a profound impact on retirement benefits.

The chart shows the largest possible Social Security benefit for retired workers at different ages in 2024. Figures in the chart are monthly totals.

Data source: Social Security Administration. Table by author.

The biggest benefit at ages 62, 66, and 70 offer particularly valuable insight: 62 is the earliest possible claiming age, 70 is the latest sensible claiming age, and 66 splits the difference.

Here's what the chart is saying: Retired workers pay a high price for claiming Social Security early. In 2024, the biggest benefit at age 70 is 80% higher than the biggest benefit at age 62.

How retired workers qualify for the maximum Social Security benefit

To summarize, Social Security benefits are calculated based on three variables: work history, lifetime income, and claiming age. I've already explained how to optimize claiming age. Workers who want the maximum retirement benefit ($4,873 per month in 2024) must delay Social Security until age 70.

However, the other two variables must be optimized as well. Here's what that means:

• Work history: Stay fully employed for at least 35 years. The PIA formula includes income from the 35 highest-paid years of work, but zeros are plugged into the equation for each missing year. That means workers with fewer than 35 years of employment cannot qualify for the maximum retirement benefit.
• Lifetime income: Earn more than the taxable limit. The PIA formula only includes income below the maximum taxable earnings limit, which is the income amount that can be taxed by Social Security. The taxable limit usually increases each year to account for changes in general wage levels. For instance, the taxable limit is $168,600 in 2024, up from $160,200 in 2023. This chart from the Social Security Administration details the taxable limit in each year since 1937.

Here's the big picture: Workers must satisfy three conditions to qualify for the maximum retirement benefit: (1) work for at least 35 years, (2) earn more than the taxable limit for 35 years, and (3) claim Social Security at age 70. For workers who satisfy the first two conditions, but claim before age 70, they will receive the biggest possible benefit for their particular claiming age.

Very few retired workers will qualify for the maximum Social Security benefit

Optimizing work history and claiming age is relatively straightforward. Workers have a great deal of control over those variables. But optimizing lifetime income is far more challenging. Only 7% of workers had income above the taxable limit in 2022. That means very few people will ever get the maximum Social Security benefit.

However, optimizing the first two variables can still have a substantial impact on the payout. Workers should strive to stay full employed for at least 35 years, and they should consider delaying Social Security until age 70.