Here’s exactly how to optimize for Social Security’s monthly maximum of $4,194

You’ll often hear that retiring on Social Security alone could mean ending up cash-strapped in old age. But that assumes you are not receiving the maximum monthly benefit of $4,194.

If that’s the amount you’re entitled to, it means Social Security could end up giving you more than $50,000 in annual income. And if you’re the type who knows how to live frugally, you could do just fine on an income like that.

A person at a desk in an office.

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But most seniors, in fact, can’t claim a monthly Social Security benefit of $4,194, not even close. And if getting the maximum monthly benefit is your goal, you’ll need to commit to it well in advance of retirement, and hope the stars align in your favor.

It’s not easy to qualify for the maximum Social Security benefit

There are three specific things you will need to do to claim the maximum monthly Social Security benefit:

  • Work at least 35 years
  • Earn a salary high enough to meet the annual Social Security salary cap for 35 years
  • File for Social Security at age 70

Some of these things are easier to do than others. If his health cooperates, he could make it through a full 35 years in the workforce. This is true even if you end up taking a few years off, whether to raise children or for another reason.

Likewise, as long as you end up in a position where you can work into your 70s or tap into other sources of income, it may be feasible to delay filing until that point. And claiming benefits at age 70 means securing the highest monthly Social Security payday for which you’re eligible (assuming you’re claiming a benefit based on your own earnings record).

But it is the intermediate step that is a little more difficult to accomplish. You can go the extra mile, put in the extra hours, and strive to be the best employee your company has ever seen. But if you’re not in a particularly lucrative field, you may have a hard time earning enough to meet Social Security’s annual salary cap.

Each year, a salary cap is established that determines the amount of income that is taxed for Social Security purposes and the amount of income that is counted in calculating your future Social Security benefit. This year, the salary cap sits at $147,000. Last year, it was a little lower, and next year, it is likely to go up.

Earning the equivalent of the annual salary cap may not be possible if your career does not lead to really high salaries. So even if you commit to working for a full 35 years and also delay filing until age 70, you still may not reach the maximum monthly benefit.

That, however, does not have to be a source of stress or disappointment for you. Most seniors don’t get anywhere near $4,194 a month from Social Security. And if you do your part to build a solid nest egg, you could get by just fine in retirement with a monthly benefit that’s half as big.

Similarly, if you can budget carefully and prioritize the things you splurge on as a retiree, you may be able to get by on less income than expected. Instead of worrying about getting the maximum monthly Social Security benefit, you may want to map out a savings strategy and figure out a way to live comfortably as an older adult without spending a fortune.

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