You'll often hear that you shouldn't plan to retire on Social Security alone since those benefits really won't pay you all that much money. But what if you were to collect $4,555 a month from Social Security?
It's certainly a possibility. That $4,555 figure represents the highest monthly Social Security benefit you can snag this year. But to claim it, you'll need to satisfy a few criteria, one of which is being a really high earner. And that's where things get tricky.
What it takes to score the maximum monthly benefit
To be eligible to collect $4,555 a month from Social Security, you'll need to:
- Work a minimum of 35 years.
- Delay your filing until the age of 70.
- Be a very high earner for many years.
The first two criteria are fairly easy to meet. If you graduate college in your early 20s, that gives you plenty of opportunity to put in 35 years in the workforce and still retire at a reasonably young age. It even allows for a career break.
Meanwhile, delaying your Social Security claim past full retirement age will result in a higher monthly benefit. Once you turn 70, your benefit can't grow anymore. But waiting until age 70 to file for Social Security will leave you with the highest monthly benefit you're eligible for based on your earnings history.
But let's talk about earnings because to snag a $4,555 monthly benefit from Social Security, your income will need to meet or exceed the wage cap for 35 years. The wage cap represents the amount of income that's subject to Social Security taxes. This year, for example, it's $160,200.
Clearly, that's a pretty high salary — one a lot of people don't make. And that's why you might struggle to claim the maximum Social Security benefit. Even if you work for 35 years and delay your claim until age 70, you might not earn enough to score a $4,555 monthly payday.
Don't worry if you can't claim the maximum benefit
Most seniors on Social Security do not collect $4,555 a month. The average monthly benefit, in fact, is $1,827.
Rather than fixate on snagging the maximum Social Security benefit, a better bet may be to focus on building yourself a solid nest egg. You can't necessarily control how much money you earn. But you can control how much you spend, at least to some degree. And if you make a point to consistently save a large chunk of your income for retirement purposes, you might enjoy a very nice income stream later in life even if your Social Security benefit doesn't come close to the $4,555 max.
Of course, it never hurts to fight for higher wages during your career to set yourself up with a higher Social Security benefit down the line (and also to make it easier to save for retirement). But at the end of the day, if most people with your job title make $75,000 to $85,000 a year, you're not going to magically make $160,200. So rather than harp on that, find other ways to set yourself up for a nice retirement.
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