There are millions pf Americans for whom Social Security is major financial backbone and represents an important portion of their retirement income. From this, it can be noted that people want to make sure they receive as much as possible for their monthly benefits. Even though the monthly maximum benefit in 2025 is $5,108 per month, most retirees will receive much less as the average check for retired workers is $1,976.
How Social Security Benefits Are Calculated
It is important for beneficiaries to note that the amount received from Social Security depends on how much of money you have earned throughout the years you worked, and how much of tax you paid into the system. The Social Security Administration (SSA) uses a formula that calculates your Average Indexed Monthly Earnings (AIME) over your 35 highest-earning years.
Should you have not worked the full 35 years, then the SSA will fill in zero for those missing years and this decreases your AIM. As a result of this, your monthly benefits will also be decreased. There are other factors that also influence your benefit amount, and this includes the age at which you began collecting benefits and also, whether you continue working while receiving benefits.
Who Qualifies for the Maximum Monthly Benefit?
There are very few people that receive a good payout from Social Security. In order to be eligible for maximum benefits ($5,108) in 2025, there are two conditions you need to meet.
- Earn at or above the wage cap for 35 years.
- Delay claiming benefits until age 70.
The wage cap in 2025 is $176,100. This simply means that you must have earned a minimum of that amount every year, for 35 years straight. However, because of inflation, wages increase every year and it becomes difficult to keep up with the earnings limit.
Ways to Boost Your Social Security Payout
Even if you’re not on track to receive the maximum benefit, there are many solutions to increase the amount you receive:
- Increase Your Earnings
The more you earn the higher your Social Security benefits will be. Up-skill yourself and seek high paying employment.
- Work for at Least 35 Years
Since the SSA uses your 35 highest-earning years to calculate your benefit, working fewer than 35 years means some years will be counted as zeros. Be mindful of this.
- Wait to Claim Your Benefit
Even though you can start collecting benefits early at the age of 62, it will be beneficial to delay this until age 70. Claiming your benefits early will permanently reduce the amount you receive. If you wait past your full retirement age your monthly benefit increases by about 8% per year until age 70.
A Word of Caution: The Future of Social Security
Something to be mindful of is that the sustainability of Social Security is uncertain. Even though benefits will still continue to be paid, if there are no changes made to Social Security, the trust funds may be depleted within the next decade. This highlights the importance of citizens making proactive decisions to secure their financial future. It is important for citizens to maximize their benefits wherever they can.
Final Thoughts
It is important to plan effectively to get the most out of your Social Security benefits. Even though the maximum earnings limit is way out for majority of Americans, working on solutions such as working for longer and increasing your income where possible as well as delaying collection of benefits will assist in maximising your benefits. Be smart and make wise decisions to secure your financial future while you have the ability to.