The maximum Social Security retirement benefit depends on the age at which retirees begin collecting and their earnings history, among other factors. In 2024, the maximum monthly benefit is $3,822 for someone who files atfull retirement age (FRA)at age 66. The highest benefit for those who qualify and delay claiming until age 70 is $4,873.
Key Takeaways
- Qualifying for Social Security requires ten years of work or 40 work credits.
- The maximum benefit is $3,822 for someone at full retirement age in 2024.
- Individuals must wait until full retirement age to claim benefits and have been a high earner for 35 years to earn the maximum Social Security benefit.
How Social Security Benefits Are Calculated
Social Security benefits are calculated by combining an individual's 35 highest-paid years. All wages are indexed to account for inflation. Wages from previous years are multiplied by a factor based on the years they were earned. This calculation provides an amount comparable to buying power based on the U.S. dollar's current value. If you have 40 work credits, you can claim Social Security as early as age 62, but waiting until FRA will result in a much higher benefit. The most individuals can receive in 2024 at age 62 is $2,710.
Once all wages are indexed, an average indexed monthly earnings (AIME) is computed by dividing the sum of all indexed wages by 420 (35 years expressed as months). A zero is entered for years when an individual did not work. The benefit amount is calculated based on factors that include the year when collection begins, FRA, and whether an individual will continue to work while collecting benefits.
Your FRA depends on the year of birth. The FRA is 66 for people born between 1943 and 1954. Retirees receive 100% of benefits if they wait until FRA to claim them. Individuals who wait until 70 (waiting for four years to file a claim for benefits) to claim Social Security receive 132% of their monthly benefit. The FRA changes to 67 for people born in 1960 or later.
Once an individual reaches 70, there is no reason to wait longer to start collecting since the benefit won’t increase further.
Claiming the Maximum Benefit
Retirees must earn Social Security’s maximum taxable income for 35 years to receive the highest benefit. The cap, which is the amount of earnings subject toSocial Security tax, is $168,600 in 2024, up from $160,200 in 2023. Individuals must be high earners over many decades and delay receiving benefits to potentially become one of a small group to receive $4,873 per month and:
- Earn at least the maximum wage taxable by Social Security over 35 years. Individuals must contribute the maximum amount. This figure is adjusted annually based on the national average wage index.
- Elect to start receiving Social Security benefits at age 70. Social Security benefits can be accessed as early as 62. However, to get the maximum, individuals need to wait until 70.
Timing Benefits
An individual retiring at 66 years and ten months will earn FRA. If they opt to receive benefits at age 62 it will reduce their monthly benefit to account for the longer time that they could receive benefits, according to the Social Security Administration (SSA). That decrease is usually permanent. If the same person waits for benefits until age 70, their monthly benefit increases. The larger amount is due to the delayed retirement credits earned for the decision to postpone receiving benefits past FRA.
The best time to start taking Social Security benefits depends on current income and employment status, other available retirement funds, and life expectancy.
The SSA has calculators to help estimate benefits.
Average Monthly Payment
The average Social Security retirement benefit is significantly lower than the maximum. It was $1,915.26 per month in April 2024, according to the SSA. To ensure that benefits maintain their buying power, the SSA adjusts them with the cost of living. For example, thecost-of-living adjustment (COLA) was 3.2% in 2024.
40%
How much of your preretirement income Social Security is designed to replace.
What Is Full Retirement Age?
The full retirement age is when individuals can collect full Social Security retirement benefits based on the year they were born. The FRA is 66 years and two months for those born in 1955 and gradually increases to 67 for those born in 1960 and after.
What Are Delayed Retirement Credits?
Individuals who wait past their FRA to collect Social Security retirement benefits receive credits for each month that they delay up to age 70. These credits can increase the monthly benefit by 8% a year.
How Much Do Individuals Have to Make to Get Maximum Social Security?
To receive the maximum Social Security benefit, individuals must earn at least the maximum wage taxable by Social Security for 35 years and delay claiming the benefit until they reach 70. The earnings cap adjusts based on changes to the national average wage index and is $168,600 in 2024.
Is Social Security Based on the Last 5 Years of Work?
No, Social Security benefits are based on the 35 highest-paid inflation-adjusted years and take into consideration the age when individuals start receiving benefits.
The Bottom Line
Social Security benefits are a form of retirement income. It is meant to replace a portion of your pre-retirement earnings based on the total amount of money you earn during your time in the workforce. You can start earning benefits as early as age 62, albeit at a lower amount. You can increase your benefit amount by delaying them until 70, which is the age at which the monthly benefit is capped.
