This is the maximum you can get out of social security – Community News
Social Security

This is the maximum you can get out of social security

mphillips007/Getty Images/iStockphoto

mphillips007/Getty Images/iStockphoto

Social Security retirement benefits are not the same for all retirees. The amount of your monthly benefit can vary widely based on a number of different factors, from when you decide to claim Social Security to how much you’ve earned during your career. However, there is a maximum allowable social security pension benefit. Ironically, the highest payout is reserved for those who probably need it least. If you want to land this top payout, here’s what you need to do.

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What is the highest social security benefit?

For 2021, the highest Social Security payout is $3,895 per month. As you will see below, reaching this maximum benefit is not easy and is based on a combination of your lifetime income and your age at which you are applying for your retirement benefit. The good news is that you have at least some control over these factors, meaning you can increase your future Social Security benefits.

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What is the average Social Security payout?

While the highest Social Security payout is actually quite large, the average benefit is much less. As of 2021, the average retirement benefit was just $1,517.67. That’s only $18,212.04 per year. Since a full-time worker on minimum wage earns about $30,000 a year, the average Social Security benefit won’t get most retirees very far. Since that $1,517.67 figure is just an average, it also means that many retirees earn payouts below that level.

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Does Your Age Affect Your Social Security Benefit?

Age is definitely an important factor in the amount of your Social Security benefit. The highest payout of $3,895 is available only to those who delay claiming their benefits as late as possible, which is age 70. If you want to claim Social Security instead at age 62, whichever is the earliest age, the maximum Social Security benefits drops to $2,324. If you retire between the ages of 62 and 70, your benefit will be adjusted between these two extremes.

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How much do you need to earn to qualify for the maximum Social Security benefit?

The Social Security taxes disappear once you reach the maximum wage base for a given year. If you earn more than that maximum, you no longer have to pay social security tax that year. However, you also do not earn extra credits for your social security retirement benefit. To qualify for the maximum Social Security payout, you must be a top earner. In fact, you must earn at least the maximum wage base for a minimum of 35 years. For 2021, the Social Security wage base is $142,800. This number is indexed for inflation, so in 1985 the wage base was only $39,600.

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Don’t forget the Social Security benefits for spouses

The maximum social security benefit only applies to private individuals. If your spouse qualifies for their own Social Security benefits, you can add your two benefits together and earn more than the maximum for a single person. But even non-working spouses are eligible for a partner’s benefit of up to half of the highest-earning spouse’s payout if their own benefit is lower. For example, if you qualify for the maximum Social Security benefit of $3,895 and your spouse’s benefit based on their own work record is only $1,200, they earn more by claiming the 50% spouse benefit. When you die, that partner’s benefit is converted into a survivor’s benefit equal to 100% of your own benefit, or $3,895 (indexed for inflation).

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What steps can you take to increase your Social Security benefit?

While calculating your Social Security benefit can be complicated, the basics underlying it are simple. To maximize your Social Security benefits, you should earn as much as you can — at least the Social Security wage base each year for 35 years — and you should delay claiming Social Security as long as possible, which is age 70.

Most workers can’t earn at those levels for 35 years, so you may need to temper your expectations a bit when it comes to your Social Security benefits. What you can do, however, is earn as much as you can, even if it’s under Social Security’s pay base, and make sure you’ve been working for at least 35 years. For example, if you want to retire after earning only 31 years, you would take four years of zeros in terms of your Social Security calculation. Working those extra four years can significantly increase your eventual Social Security benefit.

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This article originally appeared on Here’s the Maximum You Can Get Out of Social Security