How Your Nest Egg Can Beat the Maximum $4,194 Social Security Benefit

In 2022, the maximum Social Security benefit will be $4,194. Very few people are going to end up getting that much income from Social Security, though. And unless you earn a very high income every year for 35 years and wait to claim Social Security until 70, chances are you’ll fall far short of the max benefit.

The good news is, you can make sure your personal retirement nest egg produces more than that maximum benefit. Here’s how to do it.

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How much would you need to save to beat the maximum Social Security benefit?

If you want your investment accounts to produce enough income in your later years to equal the maximum Social Security benefit of $4,194, you’d need a nest egg of around $1.258 million. That’s the amount that would be required if you followed the 4% rule. That rule says you likely won’t run out of money if you take 4% out of your retirement savings account in the first year you retire and then adjust that amount up each year to accommodate inflation.

If you want to beat the maximum Social Security benefit, of course, you’d need to save a little bit more than that amount. A nest egg of $1.3 million, for example, would safely provide you with monthly income of around $4,333 per month, or $52,000 annually.

That should be more than enough for most people to enjoy a comfortable retirement, especially when combined with whatever Social Security benefits they end up getting.

How can you invest enough?

Saving $1.258 million or more may seem challenging, but it’s not out of reach for most people. A lot depends on when you start investing for the future as well as how aggressive your investments are and how they perform.

If you earn an average 10% annual return — which is reasonable to expect if you invest your money in an S&P 500 index fund — the table below shows what you’d need to save each month in order for your retirement investment account to hit $1.258 million by 65. Remember, this would match the max Social Security benefit of $4,194, so if you want to beat it, you’d need to do a little better.

If you start saving at this age…
This is the required monthly investment

25
$236.85

30
$386.80

35
$637.30

40
$1,065.94

45
$1,830.34

50
$3,299.49

Table calculations: Author

Obviously, the longer you wait to begin building your nest egg, the harder it will be because you wouldn’t have as many years in which your money is earning returns that can be reinvested. That means you have to save more for your investments to grow large enough to meet or exceed the maximum Social Security benefit.

But for those who start investing for their future in mid-life or sooner, it’s very possible that your savings will be able to produce more income than the largest possible Social Security checks. That’s good news for people who can’t necessarily get the max Social Security benefit based on their career history but who can save diligently throughout their careers and end up with a portfolio that provides an even larger income than Social Security ever could.

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