Retirement is getting more expensive, and many older Americans depend heavily on Social Security. In fact, around 40% of retirees rely on their benefits “completely” in retirement, according to a 2022 survey from The Motley Fool.
If Social Security will make up a significant portion of income in retirement, it's wise to maximize it. In 2023, the most you can collect in benefits is $4,555 per month. Here are the three requirements you'll need to meet.
1. Work for at least 35 years
To calculate your benefit amount, the Social Security Administration takes an average of your earnings over the 35 years of your career you earned the most. That number is then adjusted for inflation, and the result is the amount you'll receive at your full retirement age (FRA).
If you've worked more than 35 years by the time you start taking Social Security, only the highest-earning years will be included in your average. But if you work fewer than 35 years, you'll have zeros in your equation to account for the time you weren't working.
That, in turn, will bring down your earnings average, reduce your benefit amount, and make it impossible to reach the $4,555 max payments.
2. Delay benefits until age 70
Your earnings record and length of your career will determine your basic benefit amount, or the amount you'll receive if you begin claiming at your FRA. Your exact FRA depends on your birth year, but it will fall somewhere between ages 66 and 67.
To receive as much as possible from Social Security, though, you'll need to wait a few more years until age 70 to file for benefits.
Even if you met all the other requirements, if you were to file for Social Security at age 67, the maximum you could collect is $3,808 per month. If you file at age 62, the max benefit amount is just $2,572 per month.
3. Meet or exceed the wage cap
The wage cap is the highest income subject to Social Security taxes, and any wages you earn over this limit will not increase your benefit amount.
This cap changes from year to year to account for changes in inflation, but in 2023, it will be $160,200 per year.
To receive as much as possible from Social Security, you'll need to be reaching this limit consistently throughout your career. For context, the wage cap 35 years ago in 1988 was $45,000 per year.
What if you're off track?
Realistically, very few workers will be able to earn the max benefit amount — and that's OK. You can still increase your benefits even if you don't meet any of these three requirements. If you can get even a little closer to any one of these factors, that can result in a higher benefit amount.
For example, say you can't reach the wage cap and would prefer to claim benefits early. If you can increase your income slightly and delay Social Security from, say, age 62 to 63, that will still boost your monthly payments — potentially by hundreds of dollars per month.
Achieving the max benefit amount isn't easy, but even if you're off track, that doesn't mean you can't still increase your payments. By taking small steps, you can earn more than you might think.
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