Will Your Social Security Check Be Bigger Than the $4,194 Max Benefit?

In 2022, the maximum Social Security benefit is $4,194. This is a hefty sum, much larger than the benefit most people receive. And unsurprisingly, only a small number of retirees get close to it.

If you won't be claiming Social Security benefits this year, though, it's actually possible that your own check could be larger than this year's maximum benefit. Here's why.

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The maximum benefit will be bigger in the future

There's a simple reason why future retirees could actually see a check that's higher than 2022's $4,194 maximum benefit: The maximum benefit has historically gone up over time.

For example, here are the maximum monthly Social Security payments for the last several years:

2022: $4,194
2021: $3,895
2020: $3,790
2019: $3,770
2018: $3,698

As you can see, the maximum monthly check this year is $496 higher than the highest possible payment available just a few short years ago. And if you go back even further to 1987, the maximum benefit was just $1,056. That's well below not just today's maximum benefit, but also the average benefit of $1,657 in 2022.

The maximum benefit goes up each year because Social Security benefits naturally increase due to inflation and wage growth. Benefits are based on average wages, and people's earnings go up all the time. Periodic Cost of Living Adjustments (COLAs) that are built into Social Security also result in retirees getting raises most years. This is necessary so benefits keep their buying power instead of losing ground due to inflation, but it also means the max benefit is constantly increasing.

Because that's the case, it's an undeniable fact that future retirees are going to see bigger maximum benefits than this year's $4,194. In fact, if you aren't retiring for 20 or 30 years, it's very possible that $4,194 will be closer to the average most people get, while the country's highest earners will see a monthly payment that's much greater than that amount.

Does it matter if you get a bigger maximum benefit?

While you may be excited at the idea of getting a Social Security check that's larger than this year's maximum benefit, it's important to remember why monthly retirement checks keep increasing. They're going up because wages and prices go up as well.

Because of inflation, it will cost much more to purchase the same amount of goods and services in the future than it does today. So while your monthly check may be bigger, you won't necessarily have more buying power. In fact, that $1,056 maximum benefit in 1987 would be worth the equivalent of just $2,608 in 2022 dollars.

The bottom line is that Social Security benefits are designed to replace only around 40% of pre-retirement wages for most people, and they replace even less for high earners. So while the max benefit may sound generous, most people simply can't live comfortably on Social Security alone. Whether you're on track for a benefit above this year's max or not, you'll need plenty of savings to cover costs that Social Security doesn't and to have the secure retirement you deserve.

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