The average Retirement benefit in September was $1,921.56, but there is another big check that many beneficiaries might not know about.
Some people might find it useful to have that much saved for retirement, but most retirees can not even make ends meet with that much. This is especially true now that the costs of housing and health care are going up so quickly.
But if you make enough money at work, you can get a lot more from Social Security when you retire.
The annual cost-of-living adjustment (COLA) built into Social Security will raise the maximum payment to $5,108 per month in 2025 and will keep going up every year after that.
Which beneficiaries could be eligible for the maximum check of $5,108?
Getting the most out of that perk is mostly limited by your ability to make a high enough salary over the course of your career. The maximum check will never be given to very many Americans.
But here’s how much you need to make to join them.
Before we talk about how much you need to make to get the most out of your Social Security benefits, you should know how the government figures out your check when you retire. There are three things that go into the calculation:
- When you claim benefits
- Your earnings history
- When you were born
The government will look at how much you have earned in the past when you apply for Social Security. The company looks at your whole work history, not just the salary you made in your most recent year.
It takes into account how much your pay has gone up or down each year based on an index that starts when you turned 60. Once you turn 60, your earnings do not change.
The Social Security Administration will pick the 35 years with the highest adjusted earnings to find out how much you made each month on average.
It then uses that average to figure out your main insurance amount, or PIA, by feeding it into the Social Security benefits algorithm. Your birthdate affects this algorithm.
You will get that amount if you apply for benefits the month you start working full-time. Beneficiaries should know that their full retirement age is based on the year they were born.
Your full retirement age goes up by two months if you were born after 1954. For people born in 1960 or later, it reaches 67 years old. In this case, if you start getting Social Security benefits before you reach full retirement age, they will be less than your PIA.
That being said, if you wait past the full retirement age, you will get the biggest check from Social Security for every month you wait until you are 70.
How much money do you need to earn per month to receive the maximum check from Social Security?
Most people pay Social Security taxes on their whole salary over the course of their careers. Rich people may not have to pay taxes on all of their income, though.
This is because the Social Security Administration caps the amount of taxable income that can be earned each year. Not only will you not be taxed on any income over that amount, it will also not show up in your earnings history.
In a sense, that sets the minimum wage needed to be eligible for the biggest possible retirement payout. If you can keep making more than that amount for at least 35 years, you will be able to get a big Social Security payment.
It is not enough to just make a lot of money, though. The dates you were born and the dates you say you were born are also important. Remember that the biggest check is only given to retirees who turn 70 in 2025.
This is because of small changes in the way benefits are calculated that depend on the person’s birth year. Also, retirees can not start getting benefits until they turn 70 years old.
The way the Social Security Administration figures out benefits has a big effect on the final amount paid to retirees who made more than the maximum taxable income since 1986 and had to work until 2024.
In light of these factors, only a very small portion of people who get Social Security will get their full monthly check of up to $5,108. It is also likely that someone who is eligible for the biggest benefit has had a long and successful career that has gone on into their 60s.
This person may or may not have any plans to retire because they have saved money for it. Last but not least, do not forget that if you want to get the biggest retirement check, you should work hard and make a lot of money.
If you want to save money for your golden years, though, you might not want to work past age 60. It is smart to wait until age 70 to start getting benefits, but the best thing to do is retire early and not worry about getting the most out of your benefits.
