What Salary Do You Need to Achieve the Maximum Social Security Benefit?

For millions of older adults, Social Security is a crucial source of income during retirement. And, as per the report by the Transamerica Center for Retirement Studies, 41% of baby boomers expect their benefits to be their primary income source during their golden years.

While the average retired worker collects around $1,800 per month from Social Security, from January 2024, the maximum amount one can receive in benefits is a whopping $4,873 each month.

However, to achieve this figure, meeting certain requirements is necessary.

The length of a person’s career, the age they begin to claim benefits, and their salary all play a vital role in determining the amount they receive in benefits.

Here is what someone needs to reach the maximum benefit amount in 2024.

First of all, you should work for at least 35 years. The Social Security Administration calculates the benefit amount by determining the average of an individual's wages over the highest earning 35 years of their career.

This amount is then run through a formula to account for cost-of-living changes, and the resulting figure is the individual's basic benefit amount. So if one wants to reach the maximum payments, they should have worked for at least 35 years before taking benefits.

Next, one should hold off on claiming benefits until later. The basic benefit amount, or the benefit based on an individual's career earnings, is the amount they will receive if they file for benefits at their full retirement age (FRA).

The FRA depends on an individual's birth year, but it's 67 years for anyone born in 1960 or later. To receive the maximum benefits possible from Social Security, one would need to wait to start taking benefits until age 70, rather than 67, when the maximum benefit is $3,911 per month.

Finally, consistently reaching the wage limit is of critical importance. The maximum taxable-earnings limit or wage cap is the highest income subject to Social Security taxes, with the closer one gets to the limit resulting in increased benefits.

For 2023, the wage cap is $160,200 per year, and in 2024 it will increase to $168,600 per year.

In conclusion, achieving the maximum $4,873 monthly payments is incredibly challenging, but it is not impossible. Delaying one's retirement, working for at least 35 years, and earning consistently throughout one's career are just a few ways to start.

Even if one cannot reach the maximum benefit, though, small steps can significantly improve their financial situation in retirement.