Social Security Benefit: how to know if you are eligible for the maximum payment?
Those looking to retire on the maximum Social Security Benefit will have to take several factors into consideration, here’s a look at what you need to do.
The Social Security Administration bases your retirement benefit on your lifetime earnings in which you paid Social Security taxes and modified by other factors. The earliest one can retire and collect Social Security Benefits is 62, but if you want to receive the maximum amount you will have to work several years more.
You won’t know the exact amount you will receive until you apply, but to get a sense of what you can expect you will want to look at some of the factors that determine the monthly retirement income. Here’s a look...
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How does Social Security calculate how much you will receive?
The two main factors that will determine how much you will receive are your average income over your career and your age when you retire. The more you paid in in Social Security taxes over the years will result in a higher monthly retirement benefits check from the Social Security Administration. The more years you work the more you can get each month, especially if you keep working past 62.
The figure for both the amount you need to earn each year and what the resulting maximum benefit are adjusted annually based on changes in national wage levels and so both change each year. To calculate how much you will receive the Social Security Administration takes an average of your wages over the 35 highest-earning years of your career. Thus, if you worked less than 35 years, those years without will count as zero bringing down your average.
How much can I get each month from Social Security?
The estimated average Social Security retirement benefit in 2021 is $1,543 a month. It rose by $20 from the previous year when adjusted for inflation, the COLA for 2021 was 1.3 percent but the increase for 2022 could be radically different.
If you are age 62, the earliest you can retire, and file in 2021 the maximum you can expect is $2,324. But those who put off retirement are rewarded with an 8 percent increase on the benefits they can claim for each year they wait.
Those who wait to file for benefits when they reach full retirement age (FRA), which is currently 66 and 2 months, the most they would receive is $3,113 a month in 2021.
If you want to receive the absolute maximum Social Security Benefit possible, you’ll need to work until you are 70. Also, your earnings will have to have equaled or exceeded the Social Security’s maximum taxable income for at least 35 years. In 2021 the maximum taxable income is $142,800. This would result in you receiving $3,895 a month which would be adjusted with inflation each following year.
If you want to calculate what you might receive you can check your online My Social Security account.