Here’s Exactly How to Optimize for the $3,895 Social Security Monthly Max

If you’re like most Americans, Social Security is a key part of your retirement strategy. The average monthly benefit for retired workers was $1,558 as of August 2021. That can certainly help make your golden years more comfortable, though it’s unlikely to cover all your retirement expenses.

But it’s possible to get more than double the average benefit out of Social Security. The maximum benefit for 2021 is $3,895 a month, or $46,740 per year. However, only a small number of people qualify for that amount. Let’s explore what you’ll need to do if you want to collect the maximum Social Security benefit.

Plan to work 35 years

Your Social Security benefit is based on your 35 highest-earning years. If you only work 30 years, the remaining five years will be calculated as “0,” therefore, you wouldn’t be able to earn the maximum Social Security check.

If you want to get the biggest Social Security check, you’ll need to work for at least 35 years. Working more than 35 years may help you get a bigger benefit if you’re replacing lower-earning years with higher-earning years.

Earn the maximum taxable amount

To collect Social Security’s maximum benefit, working for 35 years isn’t enough. Your earnings would have to be equal to or greater than Social Security’s maximum taxable amount — the amount of earnings that are subject to Social Security taxes — for at least 35 years. In 2021, the maximum taxable amount is $142,800, and it increases slightly every year.

This minimum is the big reason most people will never collect the maximum Social Security benefit. The Social Security Administration estimates that in any given year, just 6% of covered workers earn more than the taxable maximum.

If you earn more than that amount in any year, Social Security will still calculate your income only up to the taxable maximum. For example, even if you earned $500,000 in 2021, your income would still be calculated at $142,800.

Wait until you’re 70

While you can start those checks as early as age 62, Social Security rewards those who wait. Here’s a breakdown of the maximum benefit you can get in 2021 based on your age when you started claiming.

Starting age
Maximum benefit

62
$2,324

65
$2,841

66
$3,113

70
$3,895

Data source: Social Security Administration.

Even if you wait until your full retirement age — which is currently 66 years and 2 months, but gradually increases to 67 for anyone born in 1960 or later — you won’t collect the maximum benefit. You’ll need to hold out and collect delayed retirement credits of 8% for each year you wait beyond your full retirement age.

Note that you can’t earn delayed retirement credits past age 70. So it’s essential to start benefits once you reach septuagenarian status. Otherwise, you’re leaving money on the table.

Fund your retirement accounts

Many people have no choice but to start Social Security sooner than they’d prefer. Health challenges, layoffs, and caregiving duties often force older workers to retire early. Many don’t have the luxury of waiting to get a bigger Social Security benefit.

But if you want to get the maximum Social Security check, it’s essential that you invest as much as possible in your retirement accounts — the earlier the better. If you have enough money saved, you may be able to live off distributions from your retirement funds while you hold out for a bigger benefit.

In 2021, you can contribute up to $6,000 to an individual retirement account (IRA), or $7,000 if you’re 50 or older. The 401(k) contribution limit is $19,500, or $26,000 for people who are at least age 50.

Should you hold out for the maximum Social Security benefit?

The vast majority of people won’t be eligible for the maximum Social Security benefit. Still, most workers will have to decide whether to start benefits early and collect smaller checks, or wait in hopes of getting the biggest benefit possible. The right solution for you depends on a number of factors.

If you’re in good health and people in your family tend to live into their nineties, waiting as long as possible often makes sense. This especially holds true when you have a career that you enjoy and want to continue working for a long time. Not only will you maximize your benefits, but you’ll give your retirement money more time to compound.

However, if your health is poor or your parents died young, starting Social Security earlier may be a better option. Likewise, if starting benefits early helps you avoid turning to credit cards or other high-interest debt to pay basic expenses, starting Social Security sooner is typically the better choice.

While getting the maximum Social Security benefit is a noble goal to shoot for, it’s not realistic for the vast majority of workers. Few people will be able to work 35 years at the maximum taxable amount. A better goal is to focus on maximizing your retirement contributions so that you can minimize your reliance on Social Security. The less you depend on Social Security, the more comfortable your retirement will be.

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