This month, some retirees are going to get a $4,873 check from Social Security. This isn't because of any special program, but rather it's because that's the amount of their monthly retirement benefits check.
For those who get the average monthly benefit of $1,907, receiving such a large amount of money every month may seem unfathomable. But there's a very good reason why a few seniors end up with a hefty income from the Social Security Administration.
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Some retirees get a $4,873 monthly benefit because of their earnings
So, why do some retirees get such a big check every month? It's because retirement benefits are based on average wages, and their average wage was pretty high.
Most people pay Social Security tax on every dollar they make. And all the money they make becomes part of their Social Security earnings record. When it comes time to retire, Social Security adjusts their wages over their career for inflation, figures out their average earnings in the 35 years when their salary was highest, and gives them benefits equal to a percent of those average wages.
There is, however, a cap on how much income is taxed by Social Security and how much is counted in the benefits formula. This cap is called the wage base limit, and it's $168,600 in 2024 (although it adjusts up due to inflation over time).
A few Americans earn an income equal to, or above, the wage base limit for at least 35 years. Those Americans have the highest average wage that it's possible to have, which puts them on track for a huge monthly check.
If they wait until 70 to start getting Social Security, they can make that check even bigger. That's because delayed retirement credits are available for those who wait to claim benefits until after reaching their full retirement age. These credits boost your standard benefit by two-thirds of 1% per month.
Retirees who maxed out their average wage as well as their delayed retirement credits are the ones who get that $4,873 payment this month and every month. This is the maximum monthly Social Security payout available.
You can maximize your own benefit, even if you can't hit $4,873 a month
If you're eyeing those big monthly payment amounts and hoping for a huge benefit of your own like that, you should know that the only way to get it is to earn the inflation-adjusted equivalent of $168,600 for 35 full years. That's not easy to do.
You can, however, work to try to make your own benefit bigger by trying to increase your income and committing to wait as long as possible to get your first Social Security check. You may not be anywhere close to $4,873 a month, but the higher you can make these checks, the better, since your retirement benefits may well be your only source of guaranteed lifetime income that's also protected against inflation.
The sooner you can start working toward increasing your Social Security, the more of an impact your actions will have. So if a $4,873 check sounds good to you, start doing all you can to get as close as possible to that number.
