Planning your retirement means, among other things, understanding the degree to which you can count on Social Security, especially if you are a high earner earning $140,000 per year.Â
Eligibility for Social Security benefits
To draw Social Security retirement benefits, one must have earned 40 credits, or the equivalent of 10 years of work in which Social Security taxes were withheld from your wages. Once eligible, the amount an individual receives depends on his or her average indexed monthly earnings, AIME, during his or her 35 highest earning years and at what age they decide to draw the benefits.
Calculating your Social Security benefits
The SSA takes your AIME and applies it to a formula for calculating your benefits, with specific bend points regarding the percent of your AIME that results in your Primary Insurance Amount, or PIA. For 2025, the formula behind the PIA is determined by:
90% of the first $1,115 of AIME, plus
32% of AIME over $1,115 and up to $6,721, plus
15% of AIME over $6,721.
Remember that Social Security taxes are only levied on the first dollar amount equal to the maximum taxable limit. For 2025, that is $176,100.
Earnings above the taxable maximum
Earning $140,000 per year means you’re under the 2025 maximum taxable earnings limit of $176,100. Thus, all your earnings are subject to Social Security taxes, and they all count toward your benefit calculation. However, because Social Security benefits are designed to replace a higher percentage of lower incomes, higher earners receive a smaller proportion of their pre-retirement income as benefits.
Age and its effect on benefits
The age at which someone begins to take their Social Security benefits makes quite a bit of difference in terms of the actual amount they are entitled to month over month. In fact, they can do it as early as age 62 or delay until age 70. A claim before one’s full retirement age reduces benefit entitlement, but delays beyond one’s FRA gives rise to enhanced benefits because of delayed retirement credits. For instance, if your FRA is 67, claiming at 62 can whittle your benefits by about 30%, while waiting until 70 boosts them by as much as 24%.
Estimating your monthly benefit
While accurate estimates are possible only with detailed earnings records, rough estimates can be approximated. Given your income is $140,000 a year, your AIME would be roughly $11,666.67 ($140,000 divided by 12 months). Applying the 2025 PIA formula:
90% of the first $1,115 = $1,003.50
32% of the amount between $1,115 and $6,721 ($5,606) = $1,793.92
15% of the amount over $6,721 ($4,945.67) = $741.85
Adding these amounts: $1,003.50 + $1,793.92 + $741.85 = $3,539.27.
This means that your estimated monthly benefit at full retirement age is $3,539.27.
Cost-of-Living Adjustments (COLA)
Benefits under Social Security are indexed for inflation each year by an applicable COLA. For 2025, the COLA is 2.5%. Thus, the maximum benefit payable at full retirement age increases to $4,018 per month in 2025.
Retirement planning
Social Security replaces only a portion of your pre-retirement earnings and is based on your earnings history. For people in higher income ranges, Social Security replaces a smaller percentage of their pre-retirement income. Additional sources of retirement savings will be needed to maintain the desired lifestyle in retirement through vehicles like 401(k) plans or IRAs.
Using online calculators
For a more personalized estimate, the SSA offers online calculators that consider your specific earnings history and projected retirement age. These tools can provide a clearer picture of your expected benefits and assist in retirement planning.
