Why the $4,194 Max Social Security Benefit Is a Fantasy

Why The $4,194 Max Social Security Benefit Is A Fantasy

You can earn up to $4,194 monthly from Social Security. But will you? Sadly, the answer’s probably no.

There are three main requirements to qualify for the maximum Social Security benefit. They involve when you claim Social Security relative to your FRA, how long you work, and how much you’ve earned. And it’s not easy to tick all three boxes.

1. When you claim Social Security and your FRA

Your Social Security income rises when you delay your benefit start date beyond your full retirement age (FRA). FRAs vary from 66 to 67, depending on your birth year. For every month after your FRA you hold off receiving benefits, you’ll earn delayed retirement credits. These increase your Social Security income by 24% to 32%.

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To get to the $4,194 monthly benefit, you need that highest increase of 32%. And you qualify for that only if your FRA is 66 and you delay your benefits until age 70.

To have an FRA of 66, you must have been born between 1943 and 1954. If your birth year is in that range, you’re already at least 68 years old. As long as you haven’t already applied for Social Security, you have a chance of meeting the first requirement for earning the $4,194 maximum benefit.

2. How long you work

The second requirement is you must have 35 years or more on your Social Security work record. (You can check your work record by logging into my Social Security.)

The 35-year threshold is related to how the Social Security formula averages your income. It is your average, inflation-adjusted income in your highest-paid 35 years that drives your Social Security benefit at FRA. If you worked fewer than 35 years, the missing years are included in the average calculation as zero income.

Unfortunately, those zeros reduce your average income, which in turn lowers your monthly benefit.

3. How much you earn

This last requirement is the kicker: You must have paid maximum Social Security taxes for 35 years or more. To do that, you would have had to earn income equal to or higher than Social Security’s taxable maximum.

The taxable maximum is always a big number. In 2022, it’s $147,000. Next year, it’ll be $160,200.

The 2022 threshold of $147,000 is more than two and a half times the median annual salary for U.S. workers, which is $55,640. It’s an incredible accomplishment to earn that six-figure max in one year. In 2020, only 6% of the working population hit that mark.

Sadly, a much smaller slice of the population will reach that threshold 35 times or more.

You can still increase your benefit

Don’t fret if the maximum Social Security check is out of your reach. As long as you’re still working, you can make moves to increase your benefit. Raising your taxable working income is one strategy. You can do this by getting a promotion, switching to a higher-paid role with a different employer, or getting a second job.

You can also increase your benefit by delaying your Social Security application. However, this strategy may lower your cumulative Social Security income. To understand the risk of that happening, run a break-even analysis. That’ll show you when your higher, delayed benefit will make up for the income you would have received if you’d claimed earlier.

Earning your max

Earning the max may not be an option, but you can still earn your max. Tools within your account at my Social Security can show you how high your own benefit can go, given your work history and target retirement date.

Log in, and you’ll see your estimated benefits based on your current income record, with an assumption for your future annual salary. Update that future salary assumption to see how income increases flow through to your benefit. You may be surprised at what’s possible.

The $4,194 maximum Social Security benefit may be a fantasy. But that doesn’t stop you from pursuing the max benefit available to you — and adding some financial breathing room to your retirement lifestyle in the process.

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