There are currently over 70 million beneficiaries of the Social Security program, and according to the Transamerica Center for Retirement Studies, around 91% of retirees expecting to rely on these monthly benefits as a source of income during their retirement. The amount each senior will receive in the form of benefits during their retirement will vary from person to person due to an array of factors, such as income earned during employment or age at which you claim.
On average, a retired worker received around $1,980 in monthly benefits as per data from February. In May of this year, however, the average benefit amount crossed a major threshold with the average benefit check surpassing the $2,000 threshold for the first time in the almost century-long history of the program. Whilst $2,000 may be the average amount received by beneficiaries, the maximum benefit amount that could be earned by retirees is even higher. For 2025, the highest possible Social Security benefit amount stands at $5,108 per month.
So how exactly are Social Security benefit amounts calculated? Here is what you need to know.
How are Social Security benefit amounts calculated?
The Social Security program is funded primarily through dedicated payroll taxes wherein the employee pays 6.2% of their wages and the employer matches this figure. As such, when it is time to claim benefits upon retirement, 35 of the highest earning years of the retiree are used to determine the amount that they will receive monthly during their retirement.
The second factor that plays into how much you will earn monthly as benefits is the age at which you claim. Social Security benefits can be claimed starting at age 62, however, claiming at this age would be considered as filing early due to the Full Retirement Age that is in place. The Full Retirement Age has been gradually increasing annually in two-month increments since the 1983 amendments in order to account for growing life expectancy, as well as to prevent the program from exhausting its funding.
In 2025, the Full Retirement Age increased to 66 years and 10 months for those born in 1959, and next year the Full Retirement Age will face one final increase, bringing it to 67 years for those born in 1960 and later. As such, by filing prior to reaching the full retirement age, your benefit will likely face a reduction of up to 30%. Conversely, if you delay claiming until you are 70, your benefit will increase at a rate of 8% per year from your Full Retirement Age, meaning your monthly benefit could grow to 132%. In 2025, this amounts to around $5,108.
According to a 2022 Congressional report, “age 62 was the most common age to file, with 29.3% of new retired-worker beneficiaries doing so. The next most popular age was 66 (24.7%), while fewer than 10% waited until age 70.”
How to earn the maximum benefit amount
In order to be considered eligible to receive the maximum monthly benefit of $5,108, a retiree will need to meet two requirements: you have earned the same amount as the wage base limit (or higher) for 35 years, and you have delayed claiming benefits until you reach age 70.
The wage base limit is also known as the taxable maximum which is the threshold on income that is taxed by Social Security. Your benefits are determined based exclusively on earnings up to this limit. For earnings in 2025, this cap is $176,100. This figure changes annually in relation to the national average wage index, and as such, in order to be considered eligible for the maximum possible benefit amount, you will had to have earned the wage base limit amount for each respective year. Falling short on either of these two benchmarks will result in a benefit lower than the maximum amount of $5,108.
“It is difficult to provide a rule of thumb since individuals’ situations are so different,” explains certified financial planner Clark Randall, director of financial planning at Creekmur Wealth Advisors. “Having said that, there is a general trend that the longer one’s life expectancy, the later he or she should file for Social Security, all things being equal.”