The benefits one can collect in retirement depends on a number of factors, including how many years a person worked, how much they made throughout their career, and at what age they choose to claim benefits. Given these factors, most retirees are collecting different-sized checks from Social Security. Retirees should try and get an idea of how much they will be able to claim from Social Security as they approach retirement, so they can better budget for this period of life.
While it's impossible to know the exact amount, there is a lot of publicly available information about Social Security. Here's the maximum Social Security benefit at ages 62, 67, and 70.
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How to get the maximum benefit
The Social Security Administration (SSA) uses a complex formula to calculate a retiree's benefits, but at the crux of the calculation is the number of years a person worked and their earnings over this time.
The SSA uses an averaged indexed monthly earnings calculation that considers the best 35 years of a person's employment record. The SSA will adjust a person's earnings to account for the change in average wages over the years and decades that a person worked. The key in getting a maximum Social Security benefit is working for at least 35 years because if you work less than that, the SSA will fill in any missing years with a zero, which will drastically impact your career earnings in their calculation.
Workers should also understand that how much they make is key to achieving the maximum benefit. The idea behind Social Security is that people pay into the program through taxes while they work, and then collect the benefits when they retire. However, the SSA can only tax up to a certain amount of a person's annual wages, which changes each year. This amount changes based on average changes to wages. For instance, the maximum taxable earnings for Social Security taxes was $118,500 in 2015 but it's $176,100 this year, reflecting the growth in earnings nationwide.
To achieve the maximum benefit, one must make the maximum taxable earnings amount each year, which can be challenging because workers don't always get raises each year and those earnings don't always match the national increase in wages.
Finally, retirees can choose to claim benefits at different ages. The full retirement age (FRA) is the age that people can claim the full amount of benefits they are entitled to based on the above calculation and factors. For people born in 1960 and after, the FRA is 67. However, retirees can start claiming benefits as soon as age 62 and as late as 70. Choosing what age to claim benefits boils down to a retiree's individual financial and health situation, and there's certainly no right answer for when to claim.
But there is a catch. Claiming benefits early means reduced benefits, while claiming after 67 leads to higher benefits. Retirees who claim at age 62 can see a 30% reduction from the benefits they would have received at their FRA, while retirees who claim at 70 can see a 24% increase in their benefits. The goal with this system is to ensure that retirees can claim -- as best as possible -- the same amount of benefits throughout their life. Here are the maximum monthly benefit checks at different ages for those retiring in 2025:
Age 62: $2,831 ($33,972 annually)
Age 67: $4,018 ($48,216 annually)
Age 70: $5,108 ($61,296 annually)
The maximum check is a fantasy
While achieving the maximum Social Security check is of course possible, it's a fantasy for most due to many of the factors I mentioned. The most important is earning the maximum taxable amount for 35 straight years. Between 2015 and 2025, one would have had to see their salary increase by 48% to keep up with the rise in maximum taxable earnings.
Additionally, according to a Bloomberg report from last year, people making over $175,000 per year are in the top 10% of earners in the U.S., meaning only a fraction of the country currently makes enough to even have a chance at the maximum benefit.
