The maximum monthly Social Security benefit seniors can collect in 2024 is $4,873. Over the years, that number is apt to change. But either way, you may be inclined to try to do what you can to score the highest monthly payday Social Security will dish out.
It's a good plan in theory. But it's one that might leave you feeling frustrated. So rather than pushing for the highest possible Social Security benefit, here's a better plan.
Image source: Getty Images.
1. Try to boost your monthly benefit -- with the understanding that it may not be the max
To score the maximum monthly benefit Social Security will pay, you need to do these things:
- Have 35 years of earnings under your belt
- Earn enough money in each of those 35 years to equal (or exceed) each year's wage cap
- Delay your Social Security claim until age 70
You may be able to tackle the first and third requirements with relative ease. It's that middle one -- earning the equivalent of the wage cap -- that may prove challenging.
See, the wage cap is pretty high. This year, it's $168,600. So even if you earn a very respectable wage, you may not earn quite enough to get Social Security's maximum monthly benefit. And there may not be very much you can do about that.
If you're an IT professional where the average annual wage for your role is $125,000 a year, you might struggle to earn $168,600. But $125,000 is a very respectable wage, and one that might set you up for a really nice Social Security benefit in its own right. So rather than fixating on scoring the maximum monthly benefit, try to focus on putting in 35 years in the labor force and extending your career so you can file for Social Security at age 70.
2. Try to build nice savings to supplement your Social Security income
To some degree, you can't control how much money Social Security ends up paying you in retirement. So another thing that's a better use of your energy than chasing the maximum Social Security benefit is doing your part to build up a solid nest egg. The more savings you bring with you into retirement, the more financially stable you might end up being during that period of life.
It's an especially good idea to try to fund a retirement account from a young age so you can take advantage of compounded returns. If you contribute $400 a month to an IRA or 401(k) over 40 years, and your investments in that account deliver an average annual 8% return (which is a notch below the stock market's average,) you'll end up with $1.24 million. That's not too shabby considering that you'll only be putting in $192,000 over 40 years to get to that point.
It's natural to want to get as much money out of Social Security as you can. But don't waste your time or energy going after the program's maximum benefit. It may not be worth the effort. And you may find that even if you try your hardest, it just doesn't end up happening due to the wages you're paid.
