What is the maximum amount you can earn from Social Security in 2023?
Social Security has been around for nearly 90 years, primarily providing monthly payments to retired workers whose benefit depends on a set of factors.
Social Security has been around for nearly 90 years, primarily providing monthly payments to retired workers whose benefit depends on a set of factors. The Social Security Administration (SSA) calculates what each beneficiary will receive on a case-by-case basis following a predetermined formula.
The monthly payments that recipients start off with have been automatically adjusted annually to keep up with inflation since 1975. Due to inflation experienced in the United States in 2022, the SSA released the largest cost-of-living adjustment (COLA) increase in more than four decades last October. With an annual rate of 8.7 percent, this historic COLA significantly increased the maximum Social Security payout this year.
The maximum is determined by the age of retirement. The maximum payment in 2022 for individuals who retired at their full retirement age was $3,345; those who retired at sixty-two saw a maximum of $2,364; and those who retired at seventy had a maximum benefit of $4,194 per month.
| Retirement Age | 2022 | 2023 |
|---|---|---|
| 62 | $2,364 | $2,572 |
| Full retirement age (65-67) | $3,345 | $3,627 |
| 70+ | $4,194 | $4,555 |
How did it change for 2023?
In 2022, the average monthly payment for retired workers was roughly $1,674 at the time the adjustment was announced, which was expected to rise to about $1,820 when the 8.7 percent increase was factored in. That meant that the average icrease in retirement benefits for recipients was around $146 per month.
That COLA increased benefits for more than seventy million beneficiaries, and the relief couldn’t have come soon enough. American consumers were dealing with inflation not seen since the 1980s pushing up prices across the board. Since then, inflation has cooled but that also means that the COLA for 2024 will be smaller, with current predictions placing it in the range of 3 percent.
How can you access the full retirement?
In 2023, you’ll need to pay Social Security taxes on income of $160,200 to get the maximum Social Security retirement payment. That’s the earnings cap amount for Social Security, above that threshold contributors do not have to pay any of their additional income.
Making $160,200 next year won’t be enough, as this amount, like the monthly payments, is adjusted each year for inflation as well. The SSA calculates your retirement benefit using your top 35 years of earnings. The Social Security Administration provides a list of the contribution and benefits base dating back to 1937.
As there is no one wage threshold, you must have reached 35 wage levels while contributing to the Social Security program in order to receive the maximum $4,555 monthly benefit offered in 2023.
How the increase impacted Supplemental Security Income
The COLA increase affects all aspects of Social Security, not just pensions.
The Supplemental Support Income (SSI) federal maximum payments increased from $841 per month to $914 in 2023 and for couples $1,371.