The average monthly Social Security payment for retirees was $1,360 in January 2017. But many retirees receive over $2,000 per month from the Social Security Administration, and the maximum possible benefit is $3,538 in 2017. However, qualifying for payments worth $3,000 or more requires some serious career planning throughout your life. Here's what you need to do to qualify for the maximum possible Social Security payment.
Start payments at age 70. The maximum possible Social Security benefit changes depending on the age you retire. Those who postpone claiming Social Security between ages 62 and 70 become eligible for higher payments with each month of delay. For example, someone who retires at age 66 in 2017 could be eligible for as much as $2,687. A person who retires at age 62 in 2017 has a smaller maximum possible payment of $2,153. Only those who delay claiming past age 66 are eligible for Social Security payments of over $3,000 per month. A high earner who retires at age 70 could get a maximum Social Security benefit of $3,538 each month.
Consistently earn a high salary. You will need to maintain a high income throughout your career in order to qualify for large Social Security payments in retirement. In recent years you need to earn a six-figure salary to get a top Social Security payment.
The maximum wage taxable by Social Security is $127,200 in 2017. However, the exact amount changes each year and has increased over time. It was $118,500 in 2015 and 2016 and $97,500 10 years ago in 2007. Back in 1997 the taxable maximum was just $65,400. Only $32,400 was taxed by Social Security 35 years ago in 1982.
Workers pay 6.2 percent of their earnings into the Social Security system and employers match this amount until their salary exceeds the taxable maximum amount of income for that year. Those who have salaries larger than the taxable maximum do not pay Social Security taxes on that income or have those earnings factored into their future Social Security payments. "In order to receive the maximum Social Security benefit you would need to earn at least the maximum Social Security wage base for at least 35 years in your career," says Jim Blankenship, a certified financial planner for Blankenship Financial Planning in New Berlin, Illinois and author of "A Social Security Owner's Manual." "The figure is adjusted each year, based on changes to the national average wage index."
If you earn more than the taxable maximum amount in a single year you won't have to pay Social Security taxes on that income. However, that income also won't be used to calculate your Social Security payments.
Earn the taxable maximum for 35 years. You need to earn at least the taxable maximum each year for 35 years in order to get the maximum possible Social Security payment. If you don't work for 35 years, zeros are averaged into your calculation and will decrease your Social Security payments. "Whether because of a layoff or choosing not to work, these years of low or no income will ultimately impact the benefit you receive," says William Meyer, CEO of Social Security Solutions, a company that analyzes Social Security claiming strategies. "If you are laid off, find a part-time or lower-wage job. Even if it's temporary, your earnings will likely count toward your future benefit and will prevent a zero from being used in the calculation."
If you work for more than 35 years, a higher earning year will replace a year when you earned less in the Social Security calculation. You can increase your Social Security payments, even after you retire, if you earn more now than you did earlier in your career. "Your benefits, after inflation, will keep rising if you work past 60 because of Social Security's annual recomputation of benefits," says Laurence Kotlikoff, an economics professor at Boston University and co-author of "Get What's Yours: The Secrets to Maxing Out Your Social Security." "You can be 100, earn above the ceiling and the next year you'll get a real benefit hike."
Emily Brandon is the author of "Pensionless: The 10-Step Solution for a Stress-Free Retirement."
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