The maximum Social Security retirement benefit depends on the age at which retirees begin collecting and their earnings history, among other factors. In 2024, the maximum monthly benefit is $3,822 for someone who files atfull retirement age (FRA)at age 66. The highest benefit for those who qualify and delay claiming until age 70 is $4,873.
Key Takeaways
- Qualifying for Social Security requires ten years of work or 40 work credits.
- The maximum benefit is $3,822 for someone at full retirement age (FRA) in 2024.
- To earn the maximum, individuals must wait until full retirement age to claim benefits and have been a high earner for 35 years.
How Social Security Benefits Are Calculated
Social Security benefits are calculated by combining an individual's 35 highest-paid years. All wages are indexed to account for inflation. Wages from previous years are multiplied by a factor based on the years they were earned. This calculation provides an amount comparable to buying power based on the USD's current value. If you have 40 work credits, you can claim Social Security as early as age 62, but waiting until FRA will result in a much higher benefit. The most individuals can receive in 2024 at age 62 is $2,710.
Once all wages are indexed, an average indexed monthly earnings (AIME) is computed by dividing the sum of all indexed wages by 420 (35 years expressed as months). A zero is entered for years when an individual did not work. The benefit amount is calculated based on factors that include the year when collection begins, FRA, and whether an individual will continue to work while collecting benefits.
Your FRA depends on the year of birth. For someone born in 1960 or later, FRA is 67; if born in 1943-1954 years, it is 66. Retirees receive 100% of benefits if they wait until FRA to claim them. At age 70, vs. at FRA, individuals get an 8% bonus for each year they delay claiming.
Once an individual reaches 70, there is no reason to wait longer to start collecting since the benefit won’t increase further.
Claiming the Maximum Benefit
Retirees must earn Social Security’s maximum taxable income for 35 years to receive the highest benefit. The cap, which is the amount of earnings subject toSocial Security tax, is $168,600 in 2024, up from $160,200 in 2023.Individuals must be high earners over many decades and delay receiving benefits to potentially become one of a small group to receive $4,873 per month and:
- Earn at least the maximum wage taxable by Social Security over 35 years: Individuals must contribute the max, which adjusts annually based on the national average wage index.
- Elect to start receiving Social Security benefits at age 70: Social Security benefits can be accessed as early as 62. However, to get the maximum, individuals need to wait until 70.
Timing Benefits
An individual retiring at 66 years and ten months will earn FRA. If they opt to receive benefits at age 62 it will reduce their monthly benefit to account for the longer time that they could receive benefits, according to the Social Security Administration (SSA). That decrease is usually permanent.If the same person waits for benefits until age 70, their monthly benefit increases. The larger amount is due to the delayed retirement credits earned for the decision to postpone receiving benefits past FRA.
The best time for someone to start taking Social Security benefits depends on current income and employment status, other available retirement funds, and life expectancy.
The SSA has calculators to help estimate benefits.
Average Monthly Payment
The average Social Security retirement benefit is significantly lower than the maximum. It was $1,862.03 per month in Feb. 2024, according to the SSA.To ensure that benefits maintain their buying power, the SSA adjusts them with the cost of living. For example, thecost-of-living adjustment (COLA) was 3.2% in 2024.
40%
How much of your preretirement income Social Security is designed to replace.
What Is Full Retirement Age (FRA)?
Full retirement age (FRA) is when individuals can collect full Social Security retirement benefits based on the year they were born. The FRA is 66 years and two months for those born in 1955 and gradually increases to 67 for those born in 1960 and after.
What Are Delayed Retirement Credits?
Individuals who wait past their FRA to collect Social Security retirement benefits receive credits for each month that they delay up to age 70. These credits can increase the monthly benefit by 8% a year.
How Much Do Individuals Have to Make to Get Maximum Social Security?
To receive the maximum Social Security benefit, individuals must earn at least the maximum wage taxable by Social Security for 35 years and delay claiming the benefit until they reach 70. The earnings cap adjusts based on changes to the national average wage index and is $168,600 in 2024.
Is Social Security Based on the Last 5 Years of Work?
No, Social Security benefits are based on the 35 highest-paid inflation-adjusted years and take into consideration the age when individuals start receiving benefits.
The Bottom Line
The average monthly payout in the U.S. was less than $2000 in 2024. To maximize social security benefit payments, individuals can wait until they reach age 70 to claim them.
FAQs
The absolute maximum benefit you could receive if you start collecting Social Security in 2024 is $4,873 per month. However, very few people will qualify for this. It would require you to begin collecting payments at age 70 and to have made nearly $10,000 per month for at least 35 years (adjusted for inflation).
How do I calculate my maximum Social Security benefits? ›
Up to 35 years of earnings are needed to compute average indexed monthly earnings. After we determine the number of years, we choose those years with the highest indexed earnings, sum such indexed earnings, and divide the total amount by the total number of months in those years.
How do I figure out how much Social Security I will get? ›
If you have a personal my Social Security account, you can get an estimate of your future retirement benefits and see the effects of different retirement age scenarios. If you don't have a personal my Social Security account, create one at www.ssa.gov/myaccount.
What determines the full amount of Social Security benefits? ›
We: Base Social Security benefits on your lifetime earnings. Adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Calculate your average indexed monthly earnings during the 35 years in which you earned the most.
Is there a maximum Social Security benefit regardless of income? ›
If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520. Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.
How much Social Security will I get if I make $120000 a year? ›
The point is that if you earned $120,000 per year for the past 35 years, thanks to the annual maximum taxable wage limits, the maximum Social Security benefit you could get at full retirement age is $2,687.
Is Social Security based on the last 5 years of work? ›
Social Security bases your retirement benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then we calculate your average indexed monthly earnings from your highest 35 years of earnings.
What is the 5 year rule for Social Security? ›
The Social Security five-year rule is the time period in which you can file for an expedited reinstatement after your Social Security disability benefits have been terminated completely due to work.
How much Social Security will I get if I make $100000 a year? ›
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
How do you get the $16728 Social Security bonus? ›
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
Social Security: 4 Ways You Can Lose Your Benefits
- You Forfeit Up To 30% of Your Benefits by Claiming Early. ...
- You'll Get Less If You Claim Early and Earn Too Much Money. ...
- The SSA Suspends Payments If You Go To Jail or Prison. ...
- You Can Lose Some of Your Benefits to Taxes. ...
- You Can Lose SSDI in a Few Different Ways.
The fundamental goal of $4800 social security payment 2024 is to help citizens cope up with increased cost of living. No matter what all benefits you are receiving, this retirement check is yours. All those people who get their Social Security benefits 2024 every month are also getting these checks.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
How often does Social Security recalculate benefits based on your earnings? ›
Each year, we review the records of all Social Security beneficiaries who have wages reported for the previous year. If your latest year of earnings is one of your highest years, we recalculate your benefit and pay you any increase you are due.
Is it better to take Social Security at 62 or 67? ›
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
How much your Social Security check will be if you make $100000 per year? ›
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
What is the Social Security maximum limit? ›
Key Takeaways: The Social Security tax limit refers to the maximum amount of earnings that are subject to Social Security tax. For 2024, the Social Security tax limit is $168,600. Workers earning less than this limit pay a 6.2% tax on their earnings.
