Retirement finances of numerous retirees are substantially impacted by Social Security benefits. Although the highest monthly Social Security benefit achievable in 2023 is $4,555, only a few beneficiaries are eligible for this amount. Learn how you can determine if you belong to this select group. As an illustration, in 2023, the wage base limit is set at $160,200, indicating that any revenue above this amount is not subject to Social Security tax and will not be taken into account in determining your monthly Social Security benefit.
Social Security benefits are computed by taking a percentage of your average income during the 35 years when your earnings were at their peak (adjusted for inflation). However, the calculation does not include all income. Only earnings up to a specified wage base limit are subject to taxation each year and factored into the calculation.
A step-by-step guide to receiving $4,555 from Social Security
To attain the highest monthly Social Security benefit of $4,555, you need to have the highest average income during the 35 years considered in the calculation. This necessitates earning income that is at or above the wage base limit for each of those years. If 2023 is among the 35 years used to determine your Social Security benefit, you will need to earn a minimum of $160,200 to be eligible for the highest payout.
Since the wage base limit is adjusted annually for inflation, with $147,000 being the limit in 2022, you will essentially require an income equivalent to the inflation-adjusted $160,200 for a minimum of 35 years to qualify for the maximum benefit.
As stated by the Social Security Administration, the amount of your montly benefit is tied to your full retirement age, which is the age when you can receive your full monthly benefits. Even though your full retirement age marks the time when you can receive your full benefit amount, you have the option to start receiving benefits as early as age 62 or as late as age 70. If you choose to take benefits early, the amount will be reduced based on how far away you are from your full retirement age.
On the other hand, delaying benefits beyond your full retirement age will result in an increased monthly benefit until you turn 70. To receive the maximum benefit of $4,555, you would need to delay benefits until age 70 and meet the income requirements. For those receiving benefits at age 62, the maximum benefit in 2023 is $2,572, while at full retirement age, it is $3,627.
Discovering your monthly Social Security benefit
To obtain a precise estimate of your potential Social Security benefits, it is recommended that you verify your earnings record on the Social Security website. By creating an account, you can access your annual wages and projected monthly benefits. It’s likely that your estimated monthly Social Security benefit may fall short of the maximum of $4,555. This is not uncommon, as only about 6% of individuals exceed the wage base limit each year, and even fewer do so for 35 years.
It’s important to aim for proper saving and investing throughout your working years to ensure that Social Security serves as a supplementary income rather than your primary source of funds.
How to verify my earnings record on the Social Security website
By regularly checking and verifying your earnings record, you can ensure that you’re receiving the full amount of Social Security benefits you’re entitled to. No one wants to lose the money they actually deserve and have saved for years to receive.
You must keep track of your earnings record to ensure that you’re receiving the correct amount of Social Security benefits when it comes time to retire. Luckily, verifying your earnings record is easy and can be done online through the Social Security website.
To get started, simply create a mySocialSecurity account on the Social Security website. Once you’ve logged in, you’ll be able to access your earnings record and review your past reported earnings. This can help you identify any errors or missing information that could affect your benefit amount.
If you do notice an error or missing information, you can contact the Social Security Administration (SSA) to correct it. The SSA recommends providing documentation, such as a W-2 or tax return, to support any changes or corrections to your earnings record.
Is Social Security sending an additional one-time payment of $4,555 to all beneficiaries?
If you are considering retirement, you may begin receiving Social Security retirement benefits at age 62. However, your payment will be reduced if you start collecting benefits before your full retirement age. For anyone born in 1960 or later, full retirement benefits will commence at age 67. However, the full retirement age gradually decreases for individuals born before 1960.
The maximum Social Security benefit amount depends on the age at which a person retires, and the income received while working. Additionally, the annual cost-of-living adjustment (COLA) affects the Social Security benefit payment.
You may feel confused if you see headlines about those juicy $4,555, but there’s a catch there: the Social Security Administration (SSA) has stated that there is no additional one-time payment for beneficiaries in 2023, and that number refers to the maximum payable amount for retirees. But, not anyone will get that monthly money. Retirees who reach the age of 70 in 2023 can receive a maximum monthly benefit of $4,555, according to both the SSA and AARP websites.