Most People Won’t Reach the $4,194 Max Social Security Benefit. Why It Doesn’t Matter | Smart Change: Personal Finance

The average retiree collects around $1,657 per month in benefits, according to the Social Security Administration, but the maximum you can receive in 2022 is a whopping $4,194 per month.

While aiming for the maximum benefit amount isn’t a bad idea, it is unrealistic for most people. You’ll need to meet several requirements to max out your benefits, and some of them are exceptionally difficult to reach.

The good news, though, is that it doesn’t matter whether you can reach the maximum benefit amount or not. Regardless of how much you’re earning, there are easier ways to increase your Social Security.

There are three main requirements to earning Social Security’s maximum benefit amount: work at least 35 years, delay benefits, and consistently reach the maximum taxable earnings limit.

1. Work at least 35 years: The Social Security Administration calculates your benefits by taking an average of your earnings over the 35 highest-earning years of your career. To earn the maximum benefit amount, you’ll need to have worked 35 full years before you file.
2. Delay benefits: You can file for benefits as early as age 62, but to receive as much as possible each month, you’ll need to wait until age 70 to begin claiming.
3. Reach the maximum taxable earnings limit: This is the maximum income subject to Social Security taxes. This limit fluctuates each year to account for inflation, but in 2022, it’s $147,000 per year. To earn the maximum benefit amount, you’ll need to have been reaching these limits consistently throughout your career.

If you’re unable to meet all three of these requirements, you’re not alone. The majority of Americans won’t be able to reach the maximum benefit amount, and that’s OK. Fortunately, there are still plenty of ways to increase your benefits.

To earn the largest possible checks, you’ll need to work at least 35 years, delay benefits until age 70, and ensure you’re earning at least $147,000 per year. But if you can’t reach all three of those benchmarks, coming as close as possible will still result in a larger payment each month.

For example, maybe you can’t earn enough to reach the maximum taxable earnings limit, but you can delay benefits until age 70. That alone can potentially increase your payments by hundreds of dollars per month.

Or, maybe you don’t want to delay Social Security until age 70, but you can wait until, say, age 65 to begin claiming. That too will result in larger payments compared to if you’d filed at age 62.

Some people may not be able to delay benefits at all, and that’s OK too. If you can increase your income slightly (even if you’re nowhere near the $147,000 per year limit) or work a few more years (even if you haven’t worked a full 35 years), those measures can still increase your benefits.

The most important takeaway here is that even small measures to increase your benefits can pay off big time down the road. So even if you’re not on track to earn the maximum benefit amount, that doesn’t mean you can’t still increase your payments as much as possible.

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