3 Steps to Claiming the Maximum Social Security Benefit of $ 3,895

The average monthly Social Security retirement benefit was recently $ 1,560, or about $ 18,720 per year. If you think that’s a long way from the income you’ll need and want in retirement, you’re not alone.

Fortunately, this is only the average, and millions of beneficiaries perceive more than that – although often not. this much more. For those who will retire in 2021, the maximum monthly benefit is $ 3,895, rising to $ 4,194 for 2022. Here’s how you might get that maximum payment and what to do if you can’t.

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1. Work for at least 35 years

To get started, aim to work for at least 35 years, as the formula used to determine your benefits is based on the income (adjusted for inflation) you earned in the 35 years in which you earned the most. So if you only worked for, say, 30 years when you retire and start collecting Social Security, the formula will insert five zeros into the calculation.

2. Earn the maximum allowed

To achieve this maximum payment, according to the Social Security benefit formula, you will also need to earn the maximum amount that counts for your benefits during each of the 35 years. For 2021, this basic salary limit is $ 142,800, and for 2022, it will be $ 147,000. You can research past limits on the Social Security Administration website to see if you’ve met or exceeded them in all of your working years. (The sad truth is, most of us will fall woefully under this limit for most or all of our working years, but knowing its importance to benefit calculations can be motivating.)

3. Delay the request for your benefits

Suppose you have worked for 35 years, you retire in 2021, and have earned the maximum salary that counts for your benefits. There is one step left before qualifying for this maximum payout of $ 3,895. You must also have delayed payment of your benefits – until you are 70 years old. Each of us has a full retirement age at which we can begin to receive the full benefits to which we are entitled, based on our income history. Depending on when you were born, it’s age 66, 67, or somewhere in between.

You can start cashing as early as age 62, although cashing before your full retirement age means your checks will be lower. In contrast, you can delay past your full retirement age, increasing your benefit checks by about 8% for each year you are late. So, to maximize your benefits, you will have to delay until age 70 – at that point, it is no longer beneficial to delay further.

It might seem like a smart thing to do whether or not you get the maximum payout, and for a lot of people it is. But if many of your loved ones have lived shorter than average, or if you are in poor health, you might be better off turning on the Social Security faucet at full retirement age or earlier. . Remember that while your checks will be smaller, you will receive a lot more.

An alternative diet

The three steps above are what you need to do to get that payment of $ 3,895. If you can’t do it all, don’t worry. Relatively few people are entitled to this maximum. You can still take steps to increase your Social Security benefits, for example by working for at least 35 years. Indeed, if you earn more than ever (on an inflation-adjusted basis), you might even work a few Following years, because each high income year beyond age 35 will kick your lowest income year out of the formula.

You can try to earn more by moving up the ladder in your career, and even just accepting a few side gigs. If, for example, you teach kids, sell sweaters that you knit online, or drive for a rideshare service and earn $ 150 a week, that’s almost $ 8,000 in extra income a year.

So don’t despair if you can’t collect that $ 3,895 per month. This does not mean that you will be stuck with the average benefit of $ 1,560, or less. Take the time to learn more about Social Security and how you could increase your benefits and get the most out of the program. You will thank yourself.

Also, be sure to save and invest for your retirement on your own, through tax-advantaged plans such as IRAs and / or 401 (k), or just regular brokerage accounts. Most of us probably won’t want to live on Social Security income alone, even if we increase the amount of our benefit checks.

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