Many Americans wonder how to maximize their Social Security benefits as they approach retirement. In 2024, the maximum benefit retirees can collect is $4,873 in social security checks per month, but only a select few will qualify for this amount.
The three things you should do if you want to collect up to $4,873
Here are the three things that determine if you will be getting up to $4,873 in Social Security or not:
1. Your earnings history
Your lifetime earnings play a major role in determining your Social Security benefit. The Social Security Administration (SSA) calculates your benefit based on your 35 highest-earning years. Each year’s earnings are adjusted for inflation; the higher your average earnings, the higher your benefits.
To qualify for the maximum benefit, you must consistently earn at or above the maximum taxable earnings limit for Social Security, which was $160,200 in 2023 and $168,600 in 2024. This means you would have needed to reach or exceed this income limit for 35 years to maximize your payout. If you earned less or had gaps in your employment, your benefit will be lower. Additionally, the SSA uses a benefits formula that applies differently to your earnings depending on when you were born, further affecting your final benefit.
2. When you were born
Your full retirement age (FRA) is determined by your birth year. For individuals born between 1943 and 1954, the FRA is 66, while for those born in 1960 or later, it is 67. The FRA is important because it dictates when you can begin collecting your full Social Security benefit.
If you were born after 1960 and wait until your FRA, your benefit will be calculated based on your average earnings. However, the closer you are to age 70, the more benefits you receive. Those who delay their retirement beyond their FRA receive a delayed retirement credit, which can increase their monthly checks significantly.
3. When you retire
The timing of when you choose to begin collecting Social Security plays a crucial role in determining your monthly benefit. While you can start claiming benefits as early as age 62, doing so will reduce your payout by as much as 30%. For instance, someone with an FRA of 67 who claims at 62 will see a reduction in their benefit.
On the other hand, if you delay claiming benefits beyond your FRA, your benefits will increase. Your benefit amount rises every month you delay, maxing out at age 70. By waiting until 70 to retire, you can receive the highest possible monthly check, up to $4,873 in 2024. However, it’s important to note that delaying beyond age 70 does not further increase your benefit, so this is the optimal point to claim for those seeking the maximum payout.
Why it’s hard to achieve the maximum benefit
Earning $4,873 per month from Social Security is no small feat. This amount is based on a lifetime of high earnings, consistently reaching or exceeding the wage base limit for decades. It’s also contingent upon waiting until age 70 to claim benefits, which can be difficult for many retirees who need income earlier or cannot continue working.
Additionally, the cost-of-living adjustment (COLA) applied to Social Security yearly can affect the maximum benefit. For instance, in 2023, the COLA increased benefits by 8.7%, the largest boost in over 40 years due to rising inflation. This adjustment helps retirees maintain their purchasing power, though achieving the maximum benefit still requires decades of planning and high-level income.
