Three Easy Steps to Claim the Maximum Monthly Social Security Benefit of $4,194

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It’s not easy, but it’s doable.

It’s a common misconception that Social Security is all you’ll need to live comfortably in retirement. For most people, those benefits will not translate into much purchasing power, especially with living costs rising due to inflation.

While you might not be able to live comfortably on the average monthly Social Security benefit, it’s a different story if you’re eligible for the maximum monthly benefit. In fact, the maximum benefit available today is quite generous.

 

SOCIAL SECURITY

 

 

The maximum monthly benefit you can receive from Social Security is $4,194. To be clear, the majority of seniors receive a significantly lower benefit. But, if you want to get the most out of it, here’s what you’ll need to do.

1. Have worked for at least 35 years

Your monthly Social Security benefit will be determined by how much you earn during your 35 most productive years of employment. However, if you do not work for at least 35 years, you will be unable to collect the maximum benefit. That’s because each year you don’t have any income on file, you’ll have a $0 factored into your personal benefits equation.

2. Increase your earnings

Every year, a wage cap is set for Social Security, and earnings above that level are not counted when calculating benefits. They are also not taxed, which keeps things fair.

Because the age cap is $147,000, the most you can earn this year to count toward your future benefit is — you guessed it — $147,000. To qualify for the maximum Social Security benefit, your earnings must meet or exceed the wage cap each year during your 35 highest-paid years in the labour force.

3. Enroll in benefits at the age of 70.

You are entitled to your full monthly benefit based on your wage history once you reach full retirement age, or FRA. Depending on when you were born, your FRA is either 66, 67, or somewhere in between.

If you want to claim the maximum Social Security benefit, you can’t wait until FRA to file. Instead, you must postpone your filing until you are 70 years old. This will significantly increase your benefit, as you will receive an 8 percent increase for each year you delay claiming Social Security after FRA (up to age 70).

What if you are unable to obtain the maximum Social Security benefit?

While you can try your hardest to postpone retirement and file for Social Security at the age of 70, you may not be able to work 35 years or earn a high enough income for 35 years to meet or exceed the wage cap. But, if that’s the case, don’t worry about it.

Most seniors do not receive $4,194 per month from Social Security, so if you believe you will receive a lower benefit, you can compensate by working hard to build a solid nest egg. If you retire with $1 million or more in your IRA or 401(k), you should be able to live comfortably regardless of what Social Security pays you.

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And if you think a $1 million nest egg is out of reach, reconsider. You can get there by contributing $500 per month to a retirement plan for 35 years and earning an average annual return of 8%, which is a few percentage points lower than the stock market’s average. Once you reach that point, your Social Security benefit may not be as important to you.

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