(Katy Brockman)
Social Security benefits can make or break your retirement, so it pays to make sure you make the most of them. According to the Social Security Administration, the average retiree earns about $1,657 a month. However, the maximum you can earn in 2022 is $4,194 per month. For many older Americans, such payments can make retirement more comfortable.
There are a few requirements you need to meet to receive the maximum benefit amount, and these three factors can help you determine if you’re on the right track.
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1. Your work experience
The number of years you work before you start claiming will affect the amount you receive each month. To calculate your benefit amount, the Social Security Administration bases the calculation on your average earnings for the highest-earning 35 years of your career, and then adjusts that number for inflation. The result is the amount you would get if you filed at full retirement age (FRA).
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In order to receive the maximum payment, you need to have worked for 35 years before you can start claiming. Below this value, your average income will be added to zero, which will reduce your benefit amount.
2. Your reporting age
If you file at FRA, you will receive the full benefit amount to which you are entitled based on your employment history. But to get as much as possible, you’ll need to wait until you’re 70 to start getting it.
Delaying Social Security for a few years might not sound ideal, but it can greatly improve your benefits. In fact, even if you meet all other requirements to receive the maximum benefit amount, if you file at age 67, you’ll only be charged $3,568 a month—about $600 less than the maximum payout.
3. Your professional income
Perhaps the most important factor that affects the amount of your benefit is how much you earn throughout your career. To get as much income as possible from Social Security, you need to consistently hit the maximum taxable income limit — the maximum income you can pay Social Security taxes on.
This limit changes every year to account for changes in the cost of living, but in 2022 it’s $147,000 a year. For context, 35 years ago in 1987, the maximum taxable income limit was $43,800 per year.
To get the maximum Social Security benefits, you’ll need to hit these limits consistently throughout your career.
What if you don’t reach the maximum benefit amount?
The vast majority of workers won’t get the $4,194 monthly payment, and that’s okay. With the right strategy, you can still get as close as possible.
Any of these three factors can be used to increase your benefits. For example, your income may not be enough to meet the maximum taxable income limit, but you can work for a full 35 years before filing an application. That alone can lead to higher monthly payments.
Or maybe you can’t defer benefits until age 70, but wait an extra year or two to apply. Alternatively, your income may not be enough to meet the income limit, but you can increase it slightly. Even small steps can lead to higher benefit amounts, so try not to get discouraged if you can’t reach your maximum payment.
The amount you receive from Social Security is largely within your control, and there are several ways to increase the size of your monthly check. Whether or not you’re on track to get paid up to $4,194, the right strategy can help you earn more than you think.
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