In 2021, the maximum Social Security benefit for those retiring at full retirement age will be $3,148 monthly. That adds up to $37,776 annually -- not enough for world travel, but still a healthy supplement to the distributions you'll take from your retirement account. Here's a look at how to qualify for that maximum benefit.

The Social Security calculation

You surely didn't wake up this morning with a deep desire to learn how Social Security benefits are calculated. But a quick look at the formula provides the context for understanding how to kick off retirement in 2021 with $37,000-plus in Social Security income.

Two Social Security cards on top of $100 and $20 bills.

Image source: Getty Images.

Your benefit is based on an average of your historic earnings. The average isn't as simple as adding up your previous salaries and dividing by the number of years, however. Social Security first adjusts your earnings for inflation. Then, your adjusted earnings from your highest-paid 35 years are totaled, with two caveats:

  1. There's a cap to the income considered in the formula, corresponding to the wage base limit for each year. For instance, in 2021, the maximum allowed earnings are $142,800.
  2. If you haven't earned Social Security wages for the full 35 years, any missing years are included in the average as zeros.

The total is then divided by 420, representing the number of months in 35 years. That brings you to your income average, officially known as Average Monthly Indexed Earnings (AIME).

Your AIME is then plugged into Social Security's primary insurance amount (PIA) formula to calculate your benefit. The PIA formula is tiered and works like this:

  1. Multiply the first $996 of your AIME by 90%.
  2. Multiply AIME above $996 and through $6,002 by 32%.
  3. Multiply AIME above $6,002 by 15%.
  4. Add those numbers up and round down to the nearest multiple of $0.10. That amount is your Social Security benefit at your full retirement age (FRA).

Note that the salary levels for each tier, known as bend points, change every year. You are subject to the bend points established for the year you become eligible for Social Security.

Running through that formula with an AIME of $4,200 (approximating an average annual salary of $50,000) gives you a resulting benefit of about $1,921 monthly -- a far cry short of the $3,148 max.

Maximum taxable earnings

At this point, it's clear you have to be making quite a bit more than $50,000 annually to get 2021's highest benefit. Specifically, you need to have maxed out your AIME. That means you've earned the maximum taxable earnings for 35 years or more. As noted, the earnings cap in 2021 is $142,800 -- but it has grown significantly over the past few decades due to inflation. It was $39,600 in 1985, for example, $76,200 in 2000, and $106,800 in 2010.

The second requirement to secure the $3,148 monthly benefit is that you must have reached your FRA. Claiming early lowers your benefit by up to 30%. 

Optimizing your AIME

Given that the average annual salary in the U.S. is about $52,000, the maximum Social Security benefit is out of reach for most workers. Even so, you can still make moves that'll get you closer to that elite Social Security benchmark.

As a first step, look at your earnings history today. You can find it on your Social Security statement or by logging into my Social Security online. Estimate the number of years you will have earned Social Security wages as of your expected retirement date. If it's fewer than 35, strongly consider delaying your Social Security application. Each year you continue to work will replace a zero-income year in your average, which boosts your AIME.

If you have worked 35 years or more, you still have the chance to replace lower-income years with higher-earning ones. That might happen naturally by continuing to work if you've recently increased your income. You could also push for a promotion at work or get a second job.

Delaying your claim after FRA also increases your benefit in a different way. You'll qualify for delayed retirement credits, which can raise your Social Security income by as much as 8% per year.

Securing your Social Security

You may not be on track for the highest Social Security benefit available -- few people are. Still, any income increases in your working years can push your retirement benefit higher. Asking for a raise at work, getting a second job, or starting a side hustle are all strategies to consider. Given that Social Security income continues for the rest of your life, the cumulative financial impact of a higher starting benefit could be substantial.