How To Maximize Your Social Security Benefits

Many factors, including how much income you earned while in the workforce and at what age you started taking Social Security, determine your maximum monthly Social Security benefit. Generally speaking, the longer you can afford to wait before taking Social Security, the bigger your maximum benefit will be. But, there are several other ways to help maximize your Social Security benefit as you plan for retirement.

Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

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    Savannah Hanson
    Savannah Hanson, financial editor for RetireGuide

    Savannah Hanson

    Financial Editor

    Savannah Hanson is a professional writer and content editor with over 15 years of professional experience across multiple industries. She has ghostwritten for entrepreneurs and industry leaders and been published in mediums such as The Huffington Post, Southern Living and Interior Appeal Magazine.

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    Stephen Kates, Certified Financial Planner™ and personal finance expert

    Stephen Kates, CFP®

    Certified Financial Planner™

    Stephen Kates is a Certified Financial Planner™ and personal finance expert with over a decade of experience working with individuals and families who need help with their finances. With experience as a financial advisor for two of the largest financial firms in the country, Stephen has worked with hundreds of clients to build comprehensive financial plans to grow and protect their wealth.

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  • Published: May 18, 2022
  • Updated: September 8, 2022
  • 6 min read time
  • This page features 4 Cited Research Articles
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APA Simmons, C. (2022, September 8). How To Maximize Your Social Security Benefits. RetireGuide.com. Retrieved September 27, 2022, from https://www.retireguide.com/retirement-planning/social-security/how-to-maximize-benefits/

MLA Simmons, Christian. "How To Maximize Your Social Security Benefits." RetireGuide.com, 8 Sep 2022, https://www.retireguide.com/retirement-planning/social-security/how-to-maximize-benefits/.

Chicago Simmons, Christian. "How To Maximize Your Social Security Benefits." RetireGuide.com. Last modified September 8, 2022. https://www.retireguide.com/retirement-planning/social-security/how-to-maximize-benefits/.

What Is the Maximum Social Security Benefit?

Your maximum benefit is the most money you can get from Social Security. The figure varies from person to person, and is generally higher the longer you wait to elect to take Social Security.

Remember that, while 65 is often the age people choose to retire, Social Security does not count 65 as the full retirement age for most Americans for the purpose of their program. Your primary insurance amount (PIA) is the amount you would receive if you take benefits at your assigned full retirement age. In 2022, your PIA will be $3,345 if you retire at your full retirement age.

Conversely, if you retire early and begin taking payments at 62, the most your monthly benefit can be is $2,364. If you wait as long as possible to begin taking Social Security and retire at 70, the highest maximum benefit available is $4,194.

Social Security Maximum Benefit By Age
AgeBenefit
62$2,364
Full Retirement Age$3,345
70$4,194

While many elect to receive Social Security as soon as they are eligible, you end up leaving a lot of money on the table by retiring early. One of the easiest ways to maximize your monthly benefit amount is to hold off on taking Social Security for as long as financially possible.

To illustrate, the difference between taking the benefit when retiring early at age 62 and the maximum benefit when retiring late at age 70 equals more than $200,000 left on the table over the span of 10 years.

What Determines Your Maximum Benefit?

There are several factors that determine your maximum benefit. It should also be noted that, at minimum, you have to earn 40 Social Security credits to qualify for any kind of benefit. In most cases, 40 credits equate to 10 total years of work.

The two main areas that will impact your maximum benefit are your retirement age and your earnings history.

Full Retirement Age

Since the amount increases the longer you wait to retire, your age plays a major role in determining your maximum benefit. But, unlike retirement age, there are other factors that are more difficult to control and can’t be decided at the last minute.

Your full retirement age varies depending on the year you were born. If you were born from 1953 to 1954, then your full retirement age is 66. If you were born from 1955 to 1960, then your age will fall between 66 and 67, depending on the specific year. If you were born in 1960 or later, then your full retirement age is 67.

The closer you can get to your full retirement age before taking Social Security, the bigger your maximum benefit will be. Benefits will further increase if you wait past your full retirement age.

Earnings History

The main component in determining your maximum Social Security benefit is the income you earned while you were in the workforce. Simply put, the higher your earnings, the higher your maximum benefit will be.

You achieve this by earning what is known as the maximum taxable income while in the workforce for up to 35 years. Your benefit is determined by analyzing your average indexed monthly earnings throughout your career, meaning your income is adjusted for inflation in the calculation. If you’ve worked more than 35 years, then the 35 years in which you made the most income will be used.

In 2022, wages up to $147,000 are taxed by Social Security. You would have to earn at least this amount to be eligible for the maximum possible benefit at retirement.

How Can You Increase Your Social Security Benefit?

The most straightforward way to maximize your Social Security benefit may be largely out of your hands by the time you retire: generate a lot of income.

Since your maximum benefit is so closely tied to your earnings while in the workforce, having a high salary or high earnings is the most straightforward way to increase your benefit once you retire.

Another important path to maximizing your benefits is ensuring that you’ve spent at least 35 years in the workforce — even if that means retiring later than your full retirement age. According to the U.S. News & World Report, since your benefits are calculated based on your 35 highest-earning years paying Social Security taxes, you’ll take a big hit if you worked less than that.

To illustrate, if you only spent 30 years in the workforce, your benefits are still calculated using a 35-year window. This means your earnings would be listed as $0 for five of those years, dramatically decreasing your Social Security benefit.

Since the other main factor in determining your maximum benefit is retirement age, a natural way to increase your benefits is to hold off on retiring for as long as you can. Every year you can wait is more money added to your benefit. This additional monthly income can play a major role in increasing your standard of living once you finally start collecting benefits.

Are There Other Options For Income in Retirement?

While Social Security serves as the base income for many retirees, it isn’t the only way that you can bring in money after you’ve retired and is not the only income avenue that you should consider when planning for retirement.

One option you can look into is an annuity. There are many types of annuities, but they typically involve either using a lump sum or paying into one over time, with your money then being converted into a stream of payments that can last through your retirement.

Annuities offer you another way to receive regular income after you retire — on top of your Social Security payments — and can help ensure you never outlive or outspend your savings.

Another option to generate income is to find a way to continue working on your own terms. Depending on the industry you worked in before retiring, this could include some kind of freelance work or remote work.

Instead of a full-blown career, you could focus on working occasionally or just a few hours a week, giving yourself an extra income boost without much stress. An added bonus is that this path can also help bring some structure to your day-to-day life, which is often a major issue for new retirees.

There are plenty of avenues to take to make additional income in retirement, but one option that could be very lucrative, if you have the money or savings to get involved, is real estate. If you own a separate property from your home or have the money to buy one, then renting it out could provide a consistent and hefty source of income throughout your retirement.
A more low-impact way to get involved could be renting out a room or space in your home.

Last Modified: September 8, 2022

4 Cited Research Articles

  1. U.S. News & World Report. (2022, March 15). 10 Ways to Increase Your Social Security Payments. Retrieved from https://money.usnews.com/money/retirement/social-security/slideshows/ways-to-increase-your-social-security-payments
  2. U.S. Social Security Administration. (2022). Retirement Age Calculator. Retrieved from https://www.ssa.gov/benefits/retirement/planner/ageincrease.html
  3. U.S. Social Security Administration. (n.d.). What is the maximum Social Security retirement benefit payable? Retrieved from https://faq.ssa.gov/en-us/Topic/article/KA-01897
  4. U.S. Social Security Administration. (n.d.). Workers with Maximum-Taxable Earnings. Retrieved from https://www.ssa.gov/oact/cola/examplemax.html