You Probably Won’t Get the Maximum Social Security Benefit — So Do This Instead

Social Security doesn’t pay all seniors the same amount of money. Rather, the monthly benefit you’re eligible for is based on your personal wage history.

The highest monthly benefit you can score in 2022 is $4,194. Most seniors, however, don’t qualify for a payday that high. And if you’re in the same boat, that’s really not something to stress over.

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It’s tough to snag that max benefit

To qualify for Social Security’s maximum monthly benefit, you need to do the following things:

Work at least 35 years
Earn a lot of money during your 35 highest-paid years in the labor force
Delay your Social Security filing all the way to age 70

Now you can argue that working 35 years isn’t such a hard thing to do. But earning a lot of money is tougher. Specifically, to get the maximum Social Security benefit, you’ll need earnings over 35 years that meet or exceed each year’s wage cap.

For context, the wage cap this year is $147,000, and last year, it was $142,800. So even if your average wage over the past two years is $100,000 — an impressive sum in its own right — it won’t be enough for you to claim that maximum benefit.

Finally, delaying your filing until age 70 often means having to work until that age. Health issues or layoffs could thwart that plan, forcing you to claim Social Security sooner.

Don’t chase that max benefit

It may be tempting to try to score the highest possible monthly benefit Social Security will pay. But since that’s such a hard thing to do, a better bet may be to focus on building yourself a solid nest egg. If you sock away enough money, you’ll put yourself in a position to enjoy a comfortable retirement even if your monthly Social Security benefit only amounts to half of the maximum, or even less.

Imagine you’re able to fund an IRA or 401(k) plan over 35 years with a $500 monthly contribution. Invest heavily in stocks, and you might snag an average annual 8% return in your retirement plan, which is a bit below the broad market’s historical average. All told, that will leave you with a nest egg worth just over $1 million. Bump your monthly contributions up to $600 during that time, and you’ll have a cool $1.24 million to your name.

Focus on building savings

There’s nothing wrong with trying to get as much money out of Social Security as you can. But don’t bank on snagging the maximum monthly benefit, because it’s really hard to get. Instead, do your best to build savings so that you don’t have to worry as much about what Social Security pays you.

Remember, too, that even if your earnings aren’t strong enough to help you score the highest possible Social Security benefit during retirement, delaying your filing until age 70 will result in a 24% to 32% boost to the benefit you are entitled to, depending on your full retirement age. And that alone could leave you with a nice monthly paycheck to look forward to.

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