In 2024, the average monthly Social Security benefit is just $1,907 per month. This is considerably lower than the maximum monthly benefit, which is $4,873 per month.
There are a few important reasons why the maximum benefit is so much higher than the average. Here's what you need to know.
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The maximum benefit is available only to a very limited number of workers
The big reason why the average benefit is so much lower than the maximum benefit is because the max benefit is available only to a small number of very high earners.
See, the reason there is a max payment is because Social Security retirement benefits are based on a percentage of average wages -- but only wages up to a certain threshold are counted. Once you earn the wage base limit (which is $168,600 for 2024 and the inflation-adjusted equivalent of that amount in other years), then any extra income isn't subject to Social Security tax or counted in a benefits calculation.
The maximum benefit is available to people who earned the inflation-adjusted equivalent of $168,600 for most of their careers (35 years, specifically, since that's the number of years of income included in Social Security's benefits formula). Since most people do not earn nearly that much over their entire career, it's natural that the average benefit is a lot lower than the maximum one.
The average benefit is an average for all retirees
The average $1,907 benefit is calculated based on how much money is going to all retired workers. This includes people who claimed benefits as early as 62 when they first became available, as well as those who waited to start getting checks until later.
The later you claim benefits, the higher your checks will be up until age 70. That's because delayed retirement credits can be earned for each month you wait until age 70. Those who earn the maximum benefit must have waited until then to start getting Social Security retirement income since the highest possible benefit is available only to those who earned all the delayed retirement credits they could.
Many people end up having to claim Social Security well before 70 because they can't or don't want to work that long and need retirement benefits to support them. Since this shrinks their payments, it brings the overall average benefit down.
Neither the maximum nor the average benefit provides enough support
While it's interesting to know that most people get far less than the maximum Social Security benefit, the most important thing to realize when looking at these numbers is that retirement checks are never going to be enough by themselves to support you in the standard of living you were accustomed to while working.
See, even people who get the max benefit will replace only a small percentage of their pre-retirement earnings. Benefits are intended to replace 40% or less of what you were making at work and few people want to take such a drastic cut to their income.
So, whether you're on track for the average benefit or even the maximum benefit, be sure you're also socking away some money in a tax-advantaged retirement plan because you're going to need it.
