The Maximum Social Security Benefit in 2024 – and How to Earn It | Retirement

The amount you receive in Social Security benefits each month will have an impact on your overall retirement budget. In 2024, the maximum Social Security benefit is $4,873 per month. Getting that much, however, depends on several factors, including how many years you worked, your level of income during your working years and age you choose to begin collecting benefits.

To understand how to claim the maximum Social Security benefit in 2024, consider the following:

When you apply to receive Social Security benefits, the Social Security Administration uses a formula to determine the amount you’ll receive each month. Your benefit is based on your 35 highest-earning years. Also, you must have worked and paid taxes for at least 10 years to qualify for Social Security in retirement. When computing a worker’s benefit, earnings are adjusted or “indexed” to reflect the general rise in the standard of living during their years of employment.

The formula to calculate your Social Security benefit includes the average of your 35 years of highest pay. “When you have low figures in that mix, the average will decline and your Social Security retirement benefits may be dramatically less for the full span of your retirement years,” said David Freitag, a financial planning consultant with MassMutual Financial Group in North Grafton, Massachusetts, in an email. “That is why continuing to work longer may be important.” For every year you work that replaces a lower income year, your retirement benefits could go up.

If your spouse has a long record of earning a high income, you could consider taking a spousal benefit, which is up to 50% of your spouse’s benefit. “If you were out of the workforce raising a family for many years, you may not have had the opportunity to accrue a full career’s worth of earnings,” said Jim Worfolk, certified senior advisor, retirement income strategist and principal at Thrive Wealth Advisors in Alexandria, Virginia, in an email. “In this case, it would be wise to see which offers the better benefit.”

Workers pay a Social Security tax based on the amount they earn and their employer. Employees at a company have a tax rate of 6.2% on their earnings, which is withheld from their paychecks. Employers pay a matching 6.2% for a combined contribution of 12.4%. If you are self-employed, you’ll foot the entire Social Security tax rate of 12.4% on your income.

Once you surpass a certain level of income for the year, you are no longer required to pay Social Security taxes. In 2023, the Social Security tax limit was $160,200. In 2024, the taxable income limit is $168,600.

“To maximize benefits in your working years, you need to earn up to or over the taxable income limit,” said Derek Mazzarella, a certified financial planner and LPL financial advisor at Gateway Financial Partners in Glastonbury, Connecticut. “If you earn that number or more each year, you’re eligible for the maximum benefit. A person that makes $200,000 will get the same benefit as someone who makes $2 million a year.” For the highest benefit, you’ll need to earn the limit or more for at least 35 years.

“When you choose to take benefits matters as well,” Mazzarella said. If you start your benefits earlier than your full retirement age, the benefit will be reduced by about 8% each year. The earliest you can start your Social Security paychecks is age 62. For every year you wait after your full retirement age, your benefits will increase by 8%. This continues until age 70. If you want to get the maximum Social Security benefit, you’ll need to wait until you turn 70 to apply.

During your working years, you might focus on increasing your salary to boost your retirement benefit. You could aim to stay employed for 35 years or more, and you may decide to wait until you turn 70 to retire to get a higher monthly Social Security paycheck.

If you choose to delay applying for benefits, consider how you will cover your living expenses until Social Security checks begin. “The file-later strategy requires an income bridge,” Freitag said. You might choose to work longer and retire later to support your household during those years. Or you could look for other income streams that provide cash flow until you turn 70. These could include earnings from investments or guaranteed income from an annuity.

If you’re married, you may want to evaluate the best time to apply for benefits to maximize the amount you receive. “Often it might be a good idea for a married couple to split their Social Security start dates,” Freitag said. “One spouse starts sooner to help fill the income gap while the higher earner defers and earns the 8% per year increase between full retirement age and age 70.”