Here’s Exactly How to Optimize for the $4,194 Social Security Monthly Max

Here’s Exactly How To Optimize For The $4,194 Social Security Monthly Max

When you think about the different income sources that may be available to you during retirement, you might assume that Social Security will end up being a minor one and that you’ll rely more on your nest egg for a comfortable lifestyle. But actually, you may be surprised at how much money you’re able to get out of Social Security.

There’s a maximum monthly benefit that Social Security makes available to seniors each year, and right now, that max is $4,194. If you’re wondering what it takes to snag a benefit that high, here’s what you need to do.

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1. Work a minimum of 35 years

The monthly Social Security benefit you’re eligible for in retirement will hinge on your personal wage history. And the Social Security Administration takes your 35 highest-paid years of earnings into account when calculating your future benefits.

It’s imperative that you work a full 35 years if you want to score the maximum monthly Social Security benefit. If you only work 33 years, you’ll have $0 factored into your benefits calculation for the two years you’re missing an income.

2. Earn the equivalent of the annual wage cap for 35 years

Social Security’s main source of revenue is payroll taxes. In fact, the whole reason President Biden keeps talking about implementing payroll taxes on earnings above $400,000 is that he wants to pump more money into the program and prevent benefit cuts.

See, part of the problem is that workers don’t pay Social Security taxes on all of their wages. If they were to do that, Social Security would have more revenue to look forward to. Instead, there’s a wage cap that’s put in place every year, and earnings beyond that point aren’t taxed for Social Security purposes. They also don’t count toward calculating retirement benefits.

This year, the wage cap is set at $147,000, and it’s expected to rise by a few thousand dollars next year. To snag the maximum monthly Social Security benefit, your annual earnings must reach or exceed the wage cap for 35 years.

3. Delay your claim until age 70

Once you reach full retirement age (FRA), which is either 66, 67, or somewhere in between, depending on the year you were born, you’ll be entitled to your full monthly Social Security benefit based on your wage history. But you can grow your benefit by delaying your filing until age 70. And if you want the maximum monthly benefit, you’ll have to delay your filing until that point.

What if you can’t claim the maximum monthly Social Security benefit?

You might manage to work for 35 years in your lifetime, and you may be willing to delay your Social Security claim for a higher payday. But earning enough money to meet or exceed the wage cap on an annual basis is a whole other ball game.

That’s much harder to do, so by virtue of that alone, you may not be able to score the maximum monthly benefit. That said, most seniors on Social Security collect a lot less than $4,194 a month, so don’t sweat it if you land in the same boat. You can still work on snagging a higher benefit in retirement by fighting for raises during your career and delaying your claim as long as possible.

At the same time, you can make an effort to consistently contribute money to a retirement savings plan and invest that money savvily. All of those efforts combined could result in a financially comfortable retirement — even if your monthly Social Security benefit is well under $4,194.

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