Social Security is a staple for retirees, but the role it plays in their retirement finances varies widely because benefits vary widely. As of April, the average retired worker benefit was $2,081, but plenty of people receive well below and above that amount.
This year, the maximum Social Security benefit is $5,181. And while this may sound enticing, it's unfortunately not easy to accomplish for most people. It's a two-step process, involving career earnings and when you claim.
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You need to be a consistent high earner
Each year, Social Security puts a cap on how much of your income is subject to Social Security payroll taxes, called the "wage base limit." This year, the limit is $184,500. That means, for example, if you were to earn $200,000, $15,500 would be exempt from the payroll tax.
To be eligible for the maximum Social Security benefit, you need to earn at least the wage base limit in the 35 years that Social Security uses to calculate your benefit. The reason is tax-related: If you've earned the wage base limit in those 35 years, you've paid the maximum amount of taxes possible for those years, putting you in line to receive the highest possible benefit.
The wage base limit changes annually (in most years), so there's a chance you'll be over the limit in some years, but not others. Here are the past 10 wage base limits before this year:
| Year | Wage Base Limit |
|---|---|
| 2025 | $176,100 |
| 2024 | $168,600 |
| 2023 | $160,200 |
| 2022 | $147,000 |
| 2021 | $142,800 |
| 2020 | $137,700 |
| 2019 | $132,900 |
| 2018 | $128,400 |
| 2017 | $127,200 |
| 2016 | $118,500 |
Data source: Social Security Administration.
According to the Social Security Administration, only about 20% of current or future recipients will earn at least the wage base limit in any year during their careers. The number that will do it for 35 years is drastically smaller. And, unfortunately, even earning below the wage base limit in one of the 35 years would disqualify you from earning the maximum benefit amount.
You need to delay benefits as late as possible
The second step to receiving the maximum benefit is delaying claiming benefits until you turn 70.
When you delay benefits past your full retirement age, you receive delayed retirement credits that increase your benefit by 2/3 of 1% monthly. This works out to 8% annually and a 24% boost if your full retirement age is 67 (anyone born in 1960 or later) and you delay until 70.
Age 70 is the latest you can delay benefits and still receive delayed retirement credits, making it the latest age you should realistically claim. If you've checked the earnings box, waiting it out is your ticket to the maximum benefit.
