Want the Max $4,873 Social Security Benefit? Here’s the Salary You Need.
There’s a reason most people aren’t seeing checks anywhere near the maximum, but there are things you can do to maximize your retirement readiness.
Social Security was never intended to provide all of anyone’s retirement income, but that doesn’t mean you shouldn’t get the most you can out of the entitlement program. The question is, how? Your future Social Security payments are determined by your current contributions to the program, but your contributions are a fixed percentage of your wages.
The answer: Earn enough money to make the maximum allowable contributions to the government-administered program.
Here’s the salary you need to be earning this year (and in past years) to have any shot at securing future monthly Social Security checks like this year’s maximum of $4,873.
The magic number
The size of retired workers’ Social Security payments depends on their earnings during their working years. The more you make, the more you get back.
There are limits, however. With the program’s monthly payments being capped at $4,873, to avoid penalizing you by withholding benefits you’d otherwise be paying for, the Social Security Administration (SSA) also caps how much of your income it taxes. This year’s maximum taxable income is $168,600. If you’re earning at least that amount of money, you’re giving yourself a chance of eventually collecting the maximum possible retirement benefit from the program.
This income ceiling is regularly adjusted for inflation. The SSA’s taxable income limit was $160,200 last year. The year before that, it was $147,000. In 1994, the ceiling stood at $60,600, and in 1974, it was $13,200. Inflation has pumped these numbers up over time.
| Year | Social Security’s Taxable Earned Income Ceiling | Year | Social Security’s Taxable Earned Income Ceiling |
|---|---|---|---|
| 1983 | $35,700 | 2004 | $87,900 |
| 1984 | $37,800 | 2005 | $90,000 |
| 1985 | $39,600 | 2006 | $94,200 |
| 1986 | $42,000 | 2007 | $97,500 |
| 1987 | $43,800 | 2008 | $102,000 |
| 1988 | $45,000 | 2009 | $106,800 |
| 1989 | $48,000 | 2010 | $106,800 |
| 1990 | $51,300 | 2011 | $106,800 |
| 1991 | $53,400 | 2012 | $110,100 |
| 1992 | $55,500 | 2013 | $113,700 |
| 1993 | $57,600 | 2014 | $117,000 |
| 1994 | $60,600 | 2015 | $118,500 |
| 1995 | $61,200 | 2016 | $118,500 |
| 1996 | $62,700 | 2017 | $127,200 |
| 1997 | $65,400 | 2018 | $128,400 |
| 1998 | $68,400 | 2019 | $132,900 |
| 1999 | $72,600 | 2020 | $137,700 |
| 2000 | $76,200 | 2021 | $142,800 |
| 2001 | $80,400 | 2022 | $147,000 |
| 2002 | $84,900 | 2023 | $160,200 |
| 2003 | $87,000 | 2024 | $168,600 |
Data source: U.S. Social Security Administration.
Of course, Social Security’s maximum monthly benefit has also grown in step with inflation. In 1974, the most anyone could possibly collect from the program was only a few hundred bucks per month. In 2004, it was $1,825.
That said, earning above-average wages is only part of the formula for maxing out your eventual Social Security benefits. There are two other key components involved.
Time and age are factors as well
Earning $168,600 this year isn’t all you need to do to bank the biggest possible Social Security checks in the future. You need to have cleared the maximum taxable wages listed in the table above for at least 35 years. To calculate your benefit, the SSA factors in your 35 highest-earning years to come up with the number.
That doesn’t mean you’re required to work 35 years to collect, to be clear. If you only work 30 years, for instance, the program will simply assign you $0 in wages for the remaining five years, lowering your benefit in the process.
On the other hand, meeting or topping the above thresholds for more than 35 years doesn’t help increase the size of your Social Security check, though doing so likely allows you to save more on your own in a retirement or brokerage account.
As if earning high wages over three-plus decades isn’t hard enough, there is still one last thing you must do to maximize your monthly benefit: postpone claiming Social Security benefits until you turn 70. Although you’re eligible as early as 62, claiming prior to 70 means the SSA will reduce your benefit below the $4,873 max. Just remember that postponing your claim beyond age 70 won’t grow your Social Security checks further. In fact, since the program doesn’t retroactively pay you for more than six months into the past, you may as well file as soon as you turn 70 years old.
Just part of a bigger financial plan
Realistically, most people reading this are nowhere near qualifying for Social Security’s maximum monthly benefit, and that’s okay. The SSA says this year’s average monthly payment to retired workers is $1,907. Unfortunately, that’s not enough for most people to live on during retirement, which is why it’s so important for you to save for retirement on your own, even if it’s only a few hundred dollars per year. The key is consistency and patience, continuing to contribute when you’re discouraged or it’s difficult to do so.
Investing $1,000 per year in an average-performing equity index fund would be worth about $300,000 (pre-tax) at the end of a 35-year stretch. That amount of money could generate on the order of $1,000 in extra monthly income during retirement. Pairing that with your monthly Social Security benefit may provide a lot more breathing room in your budget.
When it comes to saving, the challenge for most people is just getting started. Don’t let that be you, even if you only start small. You can always update your savings plan and increase your contributions over time. In fact, that’s what most successful retirement savers do.
