Many seniors who are forced to retire on Social Security alone end up struggling financially. But a lot of people in that boat aren't collecting $4,873 a month. Rather, they're getting much less.
That $4,873 figure represents the maximum monthly benefit Social Security will pay in 2024. Most seniors won't come close to snagging a benefit that high. But here's what it takes to end up with a monthly $4,873 payday.
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Step 1: Work for 35 years (or more)
You don't necessarily need to work for 35 years to qualify for Social Security. But you do need to work for 35 years to be eligible for the program's maximum monthly benefit.
See, the amount of money you're entitled to each month in retirement hinges on your earnings during your highest-paid 35 years in the labor force. If you don't have 35 years of income on file, you'll have a $0 factored into your personal benefits equation for each year you don't have an earnings record. Even a single $0 could take that maximum monthly benefit off the table.
Step 2: Earn a high wage for 35 years
To claim Social Security's maximum monthly benefit, you'll need 35 years of earnings in which your pay is equal to the wage cap or beyond. That cap changes from year to year and is currently $168,600.
But either way, it's a large number. If you're a social worker with a 40-year career and an average annual salary of $80,000, don't expect to get your hands on the maximum monthly Social Security benefit.
Step 3: Delay your Social Security claim until age 70
You're entitled to your complete monthly Social Security benefit based on your personal wage history once full retirement age (FRA) arrives. That age is either 66, 67, or somewhere in the middle, depending on your year of birth.
But if you want Social Security's maximum monthly benefit, then you'll need to be prepared to delay your claim until age 70. That will result in a permanent boost to your monthly payments and potentially put $4,873 a month in your pocket if you have a high enough wage history.
When the maximum monthly benefit just isn't attainable
You may love the idea of being able to collect $4,873 a month from Social Security. But do remember that most seniors don't get anywhere near $4,873 a month. And your monthly benefit may end up being a lot lower, too.
That's not something to panic over, though. First of all, there are steps you can do to boost your personal monthly benefit, even if it's nowhere close to $4,873.
You could, for example, extend your career so that it's possible to wait until age 70 to claim Social Security. You could also try boosting your wages during your career for a higher monthly benefit -- and more near-term financial flexibility.
If you don't think you'll be getting anywhere close to Social Security's maximum monthly benefit, it's also a good idea to save and invest consistently in an IRA or 401(k). If you build a large enough nest egg, it can take the place of a higher monthly Social Security payday.
Let's imagine you're able to save $400 a month in an IRA or 401(k) plan over 35 years. If you're an average earner, that sum may be doable. If your portfolio generates an average annual 8% return, which is a bit below the stock market's average, you could end up with about $827,000 to your name.
A $4,873 monthly benefit from Social Security may be a nice thing to have. But if it's not in the cards, don't assume your retirement is doomed. Instead, take steps to build up a nice amount of savings, and do what you can to walk away with the highest Social Security benefit possible based on your earnings history.
