Current:Home > Finance3 reasons you probably won't get the maximum Social Security benefit-InfoLens
3 reasons you probably won't get the maximum Social Security benefit
View Date:2024-12-23 14:23:55
The maximum monthly Social Security benefit is $4,873 per month in 2024, which is a pretty huge amount of money to get every single month from the government.
Unfortunately, it's very unlikely that most retirees will get anywhere near that amount. In fact, here are three key reasons why your own Social Security checks will probably be much lower than the highest possible monthly check.
1. You need to earn a lot of money to max out your benefits
The Social Security benefits formula is designed to replace around 40% of pre-retirement earnings for most workers and replaces even less for high earners. So, obviously, to end up with a monthly benefit of $4,873, your salary would have had to be far higher than that amount over your career.
Want income for life?Hurt by inflation, Americans yearn for pensions in retirement. One answer may be annuities.
Specifically, you would have had to earn the inflation-adjusted equivalent of $168,600 throughout your career. Wondering why that number? It's the 2024 wage base limit, and the wage base limit changes over time due to wage growth.
The wage base limit is the reason why there's a maximum Social Security benefit in the first place. To ensure people don't get tens of thousands of dollars a month in Social Security benefits, there's a cap on the amount of wages included in the benefits formula.
If you earn the wage base limit or higher for every year of work included in the benefits calculation, then you'll have the highest possible average wage. That's the number used by Social Security to determine your benefits, so maxing out average wages is a requirement of getting the biggest payout possible.
Unfortunately, each year, only around 6% of workers have earnings above the wage base limit. That means 94% don't -- and if you're in that 94% for most of your career, the max benefit isn't within reach for you.
2. You need to max out your wages for a full 35 years
The benefits formula used to calculate Social Security doesn't just take all of your wages for each year and divide them by the number of years worked in order to calculate average wages. Instead, the inflation-adjusted wages from your 35 highest-earning years are used.
The largest possible average benefit, therefore, is available only to people who earned at least the wage base limit for 35 years. Now, this doesn't mean every single year of your career had to a high-earning one. Just 35 of them. If you worked for 40 years and you made very little during five of those years, you could still max out your benefit as long as your earnings equaled or exceeded the wage base limit for the other 35.
On the flip side, if even one year was included in your calculation where you earned less than the wage base limit, the max benefit is off the table.
3. You must claim your benefits at age 70
Finally, there's one more reason you probably aren't getting the max benefit. It's the fact you'd have to wait until 70 to claim your first Social Security check.
Even if you've got 35 years of high earnings under your belt, this just gives you the highest possible standard Social Security benefit. To get the maximum monthly income, you'd have to earn as many delayed retirement credits as possible to increase your standard benefit to the upper limit.
Delayed retirement credits are earned each month you wait beyond your full retirement age to get a Social Security check. Since they can be earned until 70, you have to wait until then to claim your first retirement payment. And this isn't very common because that's simply too long for most people to work and many folks have to claim their benefits upon retiring to get enough support.
Now, just because you probably won't earn the max benefit doesn't mean you should be discouraged. You can still increase your own checks by putting off claiming and taking steps to boost your income during your working life. But you should be aware your Social Security check is probably going to be a lot smaller than $4,873 and plan accordingly when setting retirement savings goals.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
Offer from the Motley Fool:The $22,924 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
View the "Social Security secrets"
veryGood! (321)
Related
- Suspect in deadly 2023 Atlanta shooting is deemed not competent to stand trial
- Another inmate dies in Atlanta following incarceration at a jail under federal investigation
- Getting lit for Hip-Hop's 50th birthday
- Possible listeria outbreak linked to recalled soft serve ice cream cups made by Real Kosher
- Trump on Day 1: Begin deportation push, pardon Jan. 6 rioters and make his criminal cases vanish
- How to watch Hip Hop 50 Live at Yankee Stadium with Snoop Dogg, Ice Cube and Run-D.M.C.
- $1.1 billion solar panel manufacturing facility planned for Louisiana’s Iberia Parish
- Home Depot employee fatally shot in Florida store, suspect is in custody
- Jessica Simpson's Husband Eric Johnson Steps Out Ringless Amid Split Speculation
- Race to electric: Nissan's U.S. strategy depends on southeast growth
Ranking
- Deion Sanders says he would prevent Shedeur Sanders from going to wrong team in NFL draft
- NASCAR at Indianapolis 2023: Start time, TV, streaming, lineup for Verizon 200 at the Brickyard
- The Samsung Galaxy Tab S9 is here—save up to $650 and get a free cover at Best Buy
- How to watch 'The Changeling' on Apple TV+
- Kristin Cavallari's Ex Mark Estes Jokingly Proposed to This Love Island USA Star
- Pennsylvania hiker dies on New Hampshire mountain despite life-saving efforts
- The birth of trap music and the rise of southern hip-hop
- What does Georgia spend on 'Kirby Copter' for coach's recruiting? It's not cheap.
Recommendation
-
Watch as massive amount of crabs scamper across Australian island: 'It's quite weird'
-
Coroner’s office releases names of third person killed in I-81 bus crash in Pennsylvania
-
Breakout season ahead? In Kyle Hamilton, Ravens believe they have budding star
-
3-year-old dies aboard migrant bus headed from Texas to Chicago
-
Stock market today: Asian stocks decline as China stimulus plan disappoints markets
-
Lahaina residents worry a rebuilt Maui town could slip into the hands of affluent outsiders
-
An officer was wounded and a suspect killed in gunfire in Tennessee city, police say
-
Violent threats against public officials are rising. Here's why