Are You Expecting the Maximum Social Security Benefit? You Might Want to Think Again


Social Security will account for a sizable portion of many people’s retirement income. Americans have paid Social Security taxes for decades in anticipation of receiving monthly payouts in retirement that will serve as their primary source of income or as a supplement to other sources of income, such as a 401(k) plan.

Depending on factors such as lifestyle and location, the maximum Social Security benefit may be sufficient to sustain some individuals. However, if you intend to collect the maximum amount of Social Security retirement benefits, you may want to reconsider.

Social Security Benefits



The primary insurance amount (PIA) is defined by Social Security as the amount an individual would receive if they began receiving benefits at full retirement age (before they round it down to the nearest whole dollar). Your full retirement age is calculated in the following manner, depending on the year of your birth.

Birth Year Full Retirement Age 1943 to 1954 66 1955 66 and two months 1956 66 and four months 1957 66 and six months 1958 66 and eight months 1959 66 and ten months 1960 or later 67

The Social Security Administration is the source of the data.


Social Security calculates your retirement benefits in the following manner:

  • Calculating your lifetime earnings.
    Adjusting the earnings to reflect changes in the average wage since the year the earnings were received.
  • Calculating your average monthly adjusted earnings over the 35-year period in which you earned the most.
  • Calculating your PIA by applying a formula to your earnings.
  • The maximum benefit that anyone can receive is determined by their retirement age. If you retire in 2022 at the age of full retirement, the maximum monthly benefit is $3,345. The maximum benefit is $2,364 if you retire at age 62 in 2022. Additionally, if you delay benefits until you reach the age of 70, your maximum benefit increases to $4,194.

Regrettably, it is improbable that you will be eligible for full Social Security retirement benefits. As of March 2022, over 47.6 million people were receiving benefits, with an average monthly benefit of slightly more than $1,665 — less than half of the maximum benefit allowed.



Another reason why individuals may not receive the maximum Social Security benefit, but also the maximum benefit for which they are eligible, is early retirement. You can begin receiving Social Security benefits at age 62, but your benefits will be reduced until you reach what Social Security defines as your full retirement age.

Benefits are reduced by five-ninths of 1% for each month prior to reaching full retirement age, up to a maximum of 36 months. If you retire more than 36 months before reaching full retirement age, any remaining months will be reduced further by five-twelfths of 1% each month.


_Social Security (1)


If you retire at age 62, the following chart illustrates how much your benefits will be reduced by the time you reach full retirement age.


Many people will need to rely on multiple means to live the retirement lifestyle they envision — which is perfectly fine; that is why they exist. Utilizing the various retirement accounts available to you is one of the best ways to ensure financial security in retirement.


Three Things I’m Doing Right Now to Ensure I Receive a Sizable Social Security Check in Retirement

The vast majority of workers place their trust in Social Security. Should you do so?

17 Tips for Sustaining a Comfortable Lifestyle on a Social Security Check

If your employer offers a 401(k) plan, take advantage of it (especially if the employer matches your contributions). However, it would be beneficial if you looked into other accounts, such as a Roth IRA or traditional IRA. The tax advantages of those accounts may not pay off immediately, but you’ll thank yourself later and be glad you took advantage of them during retirement.

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