Want the Maximum Social Security Benefit? It May Not Be Possible, but You Can Do This Instead

If you try to retire on Social Security alone, you may end up struggling financially. That’s because the average recipient today only gets about $2,079 per month today.

But you should know that Social Security’s maximum monthly benefit this year is $5,181. Most recipients don’t get monthly checks that large, but that doesn’t have to be a problem for you.

What it takes to get the max Social Security benefit

There are two things that go into calculating your monthly Social Security benefit — your wage history and your filing age.

Social Security takes your 35 highest-paid years of income into consideration when calculating your monthly benefits. From there, your filing age helps determine what benefit you get.

• If you file at full retirement age (FRA), you get your monthly benefit without a reduction.
• If you file early, which you can do starting at 62, your benefit is reduced based on how many months before FRA you put in your claim.
• If you delay your claim, your benefit grows 8% for each year you wait beyond FRA until age 70.

Here’s a basic example. If your FRA benefit is $2,000 a month, filing at 62 gives you $1,400 a month instead. Filing at 70 gives you $2,480.

Meanwhile, to qualify for Social Security’s max benefit, you need to have:

• A 35-year work history (or longer)
• A filing age of 70
• 35 years of earnings where your paycheck equals or exceeds the program’s wage cap

The wage cap changes annually and determines how much income is taxed to fund Social Security. This year, it’s $184,500.

What this means is that to qualify for Social Security’s max benefit, you need to be a high earner for pretty much your entire career. Since that’s not the case for most people, snagging Social Security’s highest benefit is pretty rare.

What to do instead

If you won’t qualify for Social Security’s maximum benefit, you’re in good company. But if you want a similar income, your best move is to save the difference yourself.

Let’s say your wage history makes you eligible for $2,079 a month. If that’s your FRA benefit and you wait three years until age 70 to file, you’ll get $2,578 monthly instead. That means you have a monthly gap of $2,603 to fill, or $31,236 a year.

But if you save $800,000 for retirement and use the 4% rule for withdrawals, you’ll get $32,000 a year out of your portfolio. That gives you your $31,236 with a small buffer.

How do you get to $800,000? Save about $400 a month over 35 years and invest heavily in stocks. If your portfolio gives you a yearly 8% return, which is a bit below the market’s average, you’ll have a little more than $800,000 to withdraw from.

All told, Social Security’s maximum benefit is hard to get your hands on. If it’s not in the cards, save enough to make up the difference. That way, you can set yourself up for a comfortable retirement budget that gives you the leeway to cover not just essential bills, but the things you want to do to make the most of that stage of life.