The Average Retiree Falls $2,538 Short of the Max Social Security Benefit. Here’s Why

In 2022, the maximum monthly Social Security benefit is $4,194. This would provide a generous $50,328 in retirement income for those who receive it.

Most people won’t come anywhere close to maxing out their benefits, though. In fact, the average monthly retirement check is just $1,657, which means the typical senior gets $2,538 per month less than the biggest possible check. So, the big questions are, why do so many people fall so short, and will you get anywhere close to the max benefit?

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Here’s why most seniors don’t come close to maxing out their Social Security checks

The average Social Security benefit is far smaller than the maximum benefit because retirement income is based on average wages over the course of your career.

See, Social Security benefits are meant to replace around 40% of pre-retirement income for most workers and less for the wealthiest employees because the benefits formula is progressive. The Social Security Administration:

Collects data on wages earned each year.
Adjusts the wages for inflation.
Applies a formula that gives retirees benefits equaling a percentage of their average wages over their 35 highest-earning years.

This is how the standard benefit is calculated. Then, this standard benefit is adjusted based on how old a person is when they start getting Social Security checks for the first time.

There is, however, a maximum wage that counts each year when your Social Security earnings record is created. If you earn above the maximum wage, any extra dollar of income doesn’t have Social Security taxes taken out of it, and it doesn’t count when your average wage or benefits are determined. The maximum average wage, called the wage base limit, exists to prevent people who earn millions a year from getting huge Social Security benefits.

In order to get the $4,194 maximum benefit, a retiree would need to earn an amount equal to or exceeding the wage base limit for a full 35 years. Then, because the age when benefits are claimed also affects the amount of the checks, they would need to wait to claim Social Security until age 70, when benefits max out, and there’s no further benefit to delay. That’s a full eight years after Social Security benefits become available for the first time at age 62.

Earning an amount equal to the wage base limit isn’t easy — especially when you must do it every year during a 35-year period. The exact amount of this limit is adjusted each year to account for inflation, but the necessary amount is $147,000 in 2022 and is the inflation-adjusted equivalent of that amount each year. Since most people don’t make anywhere near that much money, and since most people claim Social Security long before age 70, it’s easy to see why the average benefit is so much lower than the maximum benefit.

What can you do if you fall short of the maximum benefit?

Since chances are good that you’ll get far less than $50,328 in retirement money from the Social Security Administration, you need to be prepared for the reality of how far your benefits will go. You can find that out by visiting mySocialSecurity.gov, signing into your account, and estimating what age you’ll first claim benefits.

Since you may be surprised to find out how low the typical benefits amount is, it’s important to do this step early so you can start preparing for smaller-than-anticipated Social Security payments. If you have a realistic idea of how much support Social Security provides, you can make sure you set savings goals that will enable you to have the security you deserve as a retiree.

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