Are You Earning Enough to Get the Maximum Social Security Payout? Find Out Now

Many retired individuals depend on Social Security benefits to support their daily expenses. As other sources of income, such as retirement savings, dwindle over time, these benefits become increasingly crucial because they constitute a guaranteed income. As a result, it’s prudent for current employees to strive to enhance their future Social Security payouts.

A survey by Nationwide Retirement Institute showed that only 14% of adults strongly concurred with the statement, “I know exactly how to maximize my Social Security benefits.” 

Here are the steps needed to attain the highest possible Social Security payout, including the necessary salary threshold.

Maximum Social Security Benefit for 2024

The maximum Social Security benefit for 2024 stands at $4,555 monthly, a rise from $4,194 in 2024. This top payout generally escalates annually due to the yearly adjustments in the Social Security benefits formula, reflecting changes in the national average wage index.

Path to Attaining the Maximum Social Security Benefit

Typically, Social Security replaces around 37% of an individual’s pre-retirement income. However, the exact benefit amount hinges on the lifetime earnings and the age at which one claims the benefits. Here are the specifics:

  • Lifetime Earnings: The benefits formula employs the inflation-adjusted earnings from the 35 highest-paid years of an individual’s career to determine their primary insurance amount (PIA). PIA is the benefit one receives at full retirement age (FRA); if you were born in 1960 or later, you are entitled to 67. However, the income considered in the benefits formula is subject to a cap, the maximum taxable earnings limit. Only the income up to this limit is subject to Social Security taxes and included in the PIA calculation. For 2024, that maximum earning cap is set at $160,200. Social Security is not taken out on any additional earnings. It is important to note that this cap has also changed over time. 
  • Claiming Age: Although eligibility for retirement benefits kicks in at age 62, claiming Social Security before reaching FRA results in a reduced payout; conversely, delaying the claim until after FRA leads to an increased payout. However, it’s essential to note that delayed retirement credits cease to accumulate at age 70, making it unwise to delay claims beyond this age.

To secure the highest Social Security payout, individuals must earn a salary that meets or surpasses the maximum taxable earnings limit for a minimum of 35 years and defer retirement benefits until age 70.

Salary Requirement for the Maximum Social Security Benefit

The table shown above illustrates the maximum taxable earnings limit over the past decade, essentially depicting the minimum salary required to be eligible for the highest Social Security payout. It’s crucial to understand that sporadically reaching this taxable maximum isn’t sufficient. Only those who meet or exceed this threshold for 35 years qualify for the maximum benefit.

Unfortunately, a small fraction of Americans earn enough throughout their careers to qualify for the highest Social Security payout. In the previous year, only 7% of workers had incomes that met or surpassed the taxable maximum. The percentage of those achieving this mark over 35 different years is even smaller.

Nonetheless, don’t let this information dishearten you. Grasping how lifetime earnings and claiming age affect Social Security benefits remains invaluable. Current employees can leverage this knowledge to boost their retirement income—by ensuring a working tenure of at least 35 years or postponing benefits until age 70—even if they don’t qualify for the highest payout.

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