Are you away from the maximum Social Security benefit of $ 3,895?


Last year, the average retiree’s monthly Social Security check paid $ 1,544. Some received more, while others received less, because the amount of these payments is more or less correlated with the earnings of the recipients during their working years. But, that dollar figure is a rough idea of ​​how much the average person will receive from the government-run program once they are done working.

This typical amount, however, is less than half the maximum monthly Social Security benefit that some retirees receive (or will soon receive). Specifically, a handful of lucky people are eligible for the maximum monthly benefit of $ 3,895 this year.

Are you about to be one of those retirees? Here are the three key requirements for reaching the maximum monthly payment offered by the Social Security Administration (SSA) Retirement Supplement Program.

You are 70 years old (or will be when you retire)

The longer you can wait to start collecting your Social Security benefits, the better, because the longer you wait, the more important they are. Once you reach age 70, however, the SSA stops giving you what’s called a deferred retirement credit. You might as well start cashing in then, because waiting longer no longer extends the monthly payment.

As a perspective, assuming all other requirements for the maximum benefit are met, the maximum anyone retiring at 62, 65 and 66 can collect monthly this year is $ 2,324, $ 2,841, and $ 3. $ 113, respectively.

You are a high income earner

Just as waiting beyond 70 to retire doesn’t further boost your potential monthly payments, the Social Security Administration also caps the amount of your income used in calculating your monthly benefit. For 2021, only the first $ 142,800 of your annual income is taken into account in this personalized calculation. Fortunately for those who earn more, the SSA also stops taxing income over $ 142,800.

Image source: Getty Images.

It’s a number that comes with an important footnote. That is, this maximum income figure is still on the rise, reflecting the ever increasing cost of living. In 2011, the Social Security tax income limit was $ 106,800. In 2001, this limit was $ 80,400. As long as you have earned at least as much as the historical SSA income limit for each year you have worked, you still owe the maximum monthly payment of $ 3,895.

You have reached the SSA taxable income limit for at least 35 years

Finally, while they don’t necessarily have to be consecutive, you must have earned the maximum applicable (and taxable FICA) income for at least 35 years to receive the largest possible monthly Social Security payment.

This requirement can be a bit confusing. Even if you have worked more years than the minimum 35 years necessary to maximize your benefits, if in some of those years you did not reach the income limit, the lower average annual income could apparently reduce your benefit. once you retire.

Now this is how the Social Security Administration does its calculations. When calculating your monthly payment once you’re ready to start collecting, SSA only takes into account the 35 years in which you’ve earned the most money.

Do not get discouraged

Are you far from the maximum Social Security benefit and do you know that you cannot continue to work until the age of 70? Don’t sweat. Most people don’t get that much money from the government-run program (and most people who are still working won’t see monthly checks of this size either).

About two-thirds of retirees received monthly checks between $ 1,000 and $ 2,500 last year, while only about 2% of all beneficiaries saw a monthly check over $ 3,000.

The thing is, it doesn’t really matter. Even if you are unable to maximize your Social Security benefits, you can still build up a nice retirement outside of the program.

In fact, getting just average returns on an investment of just a few thousand dollars a year can easily make you a millionaire. The trick is to simply commit to making that investment every year for at least 30 years. You wait at least as long for your Social Security benefits to be available anyway.

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