Last month, Social Security retirement benefits were received by almost 51 million Americans. On average, the amount received was slightly less than $1,782 per month, which translates to an annual amount of $21,384. However, it is feasible to receive significantly more than that. If you desire the maximum monthly Social Security benefit of $4,555, you will need to earn a certain salary.
Prior to disclosing the target figure, it’s crucial to comprehend that achieving the maximum Social Security benefit entails more than simply attaining a specific salary amount. There are three essential steps involved in attaining this objective. The first step is to work for at least 35 years. The Social Security Administration (SSA) benefits calculation incorporates income from 35 years of work. If you don’t have 35 years of work history, the calculation will substitute $0 for each year under the 35-year benchmark. Ultimately, regardless of your salary level, you won’t receive the maximum monthly benefit if you don’t fulfill the required work history.
More keys to understanding the maximum payment of Social Security benefits
The second step is to earn a minimum of the annual wage cap for each of those 35 years. We’ll delve into this shortly. The third step is to defer claiming Social Security benefits until you reach the age of 70. Retiring before your full retirement age (FRA) leads to a reduction in benefits. However, even if you wait until your FRA, it will still not be enough to attain the maximum monthly benefit.
Let’s address the original question: the salary required to receive the maximum monthly Social Security benefit of $4,555 is not a fixed amount. The figure fluctuates every year, and for 2023, you would need to earn at least $160,200. However, the amount has been lower in previous years.
To attain the highest possible Social Security benefit, your salary must meet or exceed the benefit base in all 35 years when you earned the highest income. As per the SSA, roughly 20% of workers will earn an income exceeding the taxable maximum in at least one year of their employment. Nevertheless, in any given year, only approximately 6% of workers will exceed the benefit base. The truth is that the maximum monthly Social Security benefit of $4,555 can only be attained by a fortunate few.
There are ways to enhance your Social Security benefits. A clear-cut approach is to earn as much as possible during your working years. Pursue job advancements, switch jobs if your current employer is not offering a competitive salary, and ensure that you have at least 35 years of work history. Even if you retire before the full retirement age, postpone applying for Social Security benefits until you turn 70. While it may not result in receiving the maximum benefit, it can still yield a higher payout than what you would have otherwise received.