Here’s Exactly How to Optimize for the $4,194 Social Security Monthly Max

When you think about the various sources of income available to you in retirement, you might assume that Social Security will end up being a secondary concern and you’ll rely more on your nest egg for a comfortable lifestyle. But actually, you might be surprised at how much money you can get out of Social Security.

There is a maximum monthly benefit that Social Security makes available to seniors each year, and right now that maximum is $4,194. If you’re wondering what it takes to gain such a high advantage, here’s what you need to do.

1. Work at least 35 years

The monthly Social Security benefit you are entitled to in retirement depends on your personal wage development. And the Social Security Administration takes your 35 best-paid years of earnings into account when calculating your future benefits.

It is imperative that you work a full 35 years if you want to earn the maximum monthly Social Security benefit. If you only work 33 years, you’ll count $0 into your benefit calculation for the two years that you have no income.

2. Earn the equivalent of the annual wage cap for 35 years

The main source of income for social security is income tax. The only reason President Biden keeps talking about imposing payroll taxes on earnings over $400,000 is to pump more money into the program and prevent benefit cuts.

You see, part of the problem is that workers don’t pay Social Security taxes on all of their wages. If they did, Social Security would have more revenue to look forward to. Instead, there is a wage cap that is introduced each year, and income above that point is not taxed for Social Security purposes. They also do not count towards the calculation of the old-age pension.

This year, the wage cap is $147,000, and it’s expected to increase by a few thousand dollars next year. To receive the maximum monthly Social Security benefit, your annual income must meet or exceed the 35-year salary cap.

3. Delay your entitlement until age 70

Once you reach full retirement age (FRA), which is either 66, 67 or somewhere in between depending on the year of your birth, you are entitled to your full monthly Social Security benefit based on your wage history. But you can increase your achievement by deferring your submission until age 70. And if you want to receive the maximum monthly benefit, you must defer your filing until that time.

What if you can’t claim the maximum monthly Social Security benefit?

You may manage to work 35 years of your life, and you may be willing to defer your Social Security entitlement for a higher payday. But making enough money to meet or exceed the annual wage cap is another matter entirely.

This is much more difficult, so you may not be able to get the maximum monthly benefit from this alone. However, most seniors collect a lot less than $4,194 a month on Social Security, so don’t sweat it if you end up in the same boat. You can still work towards earning a higher retirement benefit by fighting for raises throughout your career and delaying your entitlement for as long as possible.

At the same time, you can strive to put money into a retirement plan on a regular basis and invest that money wisely. All of these efforts combined could result in a financially comfortable retirement — even if your monthly Social Security benefit is well under $4,194.