Here’s Exactly How To Optimize for Social Security’s Monthly Max Benefit

In 2021, the maximum Social Security benefit that you could receive is $3,895. This maximum benefit goes up each year. In 2022, it will be $4,194.

If you hope to receive the current year's max benefit whenever you retire, there are steps you'll need to take throughout your life to do it. Here's what they are.

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1. Earn a high income

The maximum Social Security benefit is available only to people who earn the maximum taxable income. That's because benefits are based on average wages earned throughout a career. To max out your benefit, you need the highest average wage possible.

In 2022, you'll need to aim for annual earnings of $147,000 or higher to be on track for the max benefit when you leave the workforce. Next year, $147,000 is the maximum taxable income. Anything you earn above that wouldn't count toward your benefits. That's because the Social Security sets a wage base limit, and no income above it is taxed or counted in the benefits formula. This wage cap ensures millionaires and billionaires don't get huge Social Security checks.

Reaching this level of income is difficult as only a small percentage of people earn that much during the course of a year. Some options to help boost your income to the requisite level could include:

Working overtime or taking on a side job.
Improving your qualifications to increase your salary.
Starting your own business — if you have an idea that you believe could turn into a big success.

The wage base limit will go up each year. So, even if you hit the maximum taxable income in 2022, you won't be on track for the maximum benefit unless you do this in each year that counts in your Social Security benefits formula.

2. Work for at least 35 years

So, how many years count in your benefits formula? The answer is 35. The average wage benefits are based on is calculated using the 35 years when you earn the most, on an inflation-adjusted basis.

If you earn at least the wage base limit for a full 35 years, you could potentially max out your benefits by working exactly that long. But, if you fall short for even a single year, you won't get the highest Social Security checks available.

Now, you could work for more than 35 years if you wanted to. This would push some lower earning years out. If you work for 37 years and earn the taxable maximum in 35 of them, you'd be on track for the max benefit.

Of course, if you work less than 35 years, you'll lose out on your chance at the max Social Security check. A year of $0 average wages will be factored into your benefits formula for each year you fall short of the 35 year target. So, if you earned the wage base limit for 34 years and retired, the inclusion of one year of $0 wages would prevent you from maxing out your monthly Social Security check.

3. Claim Social Security at 70

If you earn at least the wage base limit for a full 35 years, you still haven't yet earned the max Social Security benefit. There's one more step you must take. You'll have to also wait to claim benefits until 70.

That's because maxing out your wages for 35 years would get you the largest possible primary insurance amount (PIA). Your PIA is what you'd receive if you claimed benefits at full retirement age (between 66 and four months and 67 for anyone turning 66 in 2022 and beyond). If you claim benefits at FRA, you miss out on delayed retirement credits. These can be earned until age 70 and you'll need to max them out to get the largest Social Security checks available.

Delaying benefits until 70 and earning the taxable maximum for 35 years can both be difficult. But, even if you can't get the highest benefit available, you can still raise your own Social Security checks by raising your income as much as you can, delaying your benefits claim as long as you can, and continuing to work for no less than 35 years.

It's worth trying to take these steps if you'll be counting on income from the Social Security Administration to support you in your later years.

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