Did you know that millionaires and billionaires get the same size Social Security check as people whose income is a fraction of what they earn? There comes a point when Social Security checks simply cannot get any bigger no matter how much money you make.
Here's when that happens in 2024 -- along with some details on why it occurs.
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When you max out your Social Security check
In 2024, no matter how much money you made throughout your career, and regardless of what age you retired, you cannot receive a Social Security check higher than $4,873 per month.
There's a reason why that's the case. To understand, you'll need to know how the Social Security benefits formula works. Specifically:
- Retirees receive a standard insurance benefit or primary insurance amount (PIA).
- PIA is based on earnings during the 35 highest-earning years of your career after wages throughout your working life are adjusted for inflation.
- You get the maximum possible PIA if you earn the maximum taxable earnings for all 35 years that count in your benefits calculation.
- If you claim your benefits at age 70, you can increase the maximum PIA by earning delayed retirement credits.
The key here is that you must max out your taxable earnings to get the highest benefit. Not all earnings are taxable, though. The fact that not every dollar is subject to Social Security tax explains why Social Security checks can't get any bigger than $4,873 in 2024.
Most people pay Social Security on all their income, so all their income counts when their primary insurance amount is calculated. Their benefits end up equaling somewhere around 40% of their earnings. However, Social Security has something called a wage base limit. This limits or caps the wages that are taxed each year -- and, by extension, caps the wages that are used when benefits are calculated and caps the benefits available.
In 2024, anyone who earned the maximum taxable income for 35 years and who waited until 70 to claim their benefits will receive a $4,873 benefit. Anyone who did not do that will receive less. No one can receive more.
The path to the highest possible Social Security check
To get the largest possible benefit, you'll need to earn the inflation-adjusted equivalent of $168,600 for no less than 35 years. The $168,600 is the wage base limit for 2024, but it changes over time to account for wage growth. Next year, it will likely be higher. Last year it was $160,200.
You can work for longer if you want, and earn more if you want, but you still can't make your checks any bigger if you do so. On the other hand, if you fall short of the maximum taxable earnings in even one of the 35 years counted in your benefits formula, you can't receive the biggest check available. The same is true if you claim benefits even one month before 70, because you will have missed out on the chance to grow your benefit with delayed retirement credits.
Very few retirees will get $4,873 per month since these tasks are hard to accomplish. You can find an estimate of your own benefits at mySocialSecurity.gov, and you should so you can get a clear idea of what your benefits will do for you before you claim them. This helps you decide how much supplementary income you need, since chances are good, your Social Security check will be a lot smaller and not enough to fund a comfortable life in your later years.
