There are millions of Americans who think that Social Security is just a monthly support payment that helps cover essential expenses during their retirement year. However, there is actually a formula that is used to determine how much you’ll actually receive, and if you follow it carefully, you could walk away with more than $60,000 a year from Social Security.
The government’s formula is based on three simple steps that can make a big difference in your future income. Let’s break it down.
Step 1: Work for at Least 35 Years
It’s important to remember that Social Security benefits are calculated based on highest 35 years of earnings. If you worked for less than 35 years, the Social Security Administration (SSA) fills in the missing years with zeros. These zeros eventually bring your monthly check lower.
With that being said, if you are still working and have less than 35 years of work, consider staying in the work field for a little while longer to increase your benefit.
Simply put, the longer your (especially at a higher pay), the more your Social Security benefits are.
Step 2: Earn as Much as You Can (Up to the Limit)
Remember, every year, only a certain amount of your income is subject to Social Security taxes. This is called the maximum taxable earnings limit. In 2025, that limit is $168,600. Any income you earn above that amount doesn’t count toward your future benefits.
You will be eligible for the highest potential Social Security payment if your earnings remain at or above that threshold for 35 years. Although the majority of individuals don’t make that much money, the principle remains the same: the more money you make, the greater your advantage.
Even if you reach the tax threshold, regularly increasing your income will significantly boost your lifetime earnings.
Remember, Social Security is designed to replace a portion of your pre-retirement income. So, the more you make while working, the more you’ll receive when you retire.
Step 3: Delay Claiming Until Age 70
The best move you can make is waiting until your Full Retirement Age (FRA) or at least until age 70. You can start collecting Social Security as early as age 62, but doing so means you’ll get smaller checks for the rest of your life. If you wait until your FRA you’ll get your full benefit amount.
However, if you wait until age 70, your benefits increase by 8% for every year that you wait.
The Formula in Action
So, what’s the “secret formula”? It’s actually simple math:
- Work at least 35 years.
- Earn as much as possible (up to the yearly limit).
- Wait until age 70 to start collecting.
If you consider following these steps, it will increase your chances of possibly receiving a higher Social Security benefit. Even if you are unable to follow all, even just one or two will be of great assistance.
The Bottom Line
There are millions of American citizens who rely on Social Security and it’s important to understand how to maximise your benefits. The more you understand how it’s calculated, the more control you would have over your benefits. The end goal is a peaceful retirement and in order to achieve that, decisions need to be made early.
Make sure you plan ahead and make proactive decisions to safeguard your benefits.
Take the time to properly prepare, estimate your potential benefit at various ages, and review your earnings history on the Social Security website.
Be sure to seek assistance from a financial advisor if you are not sure and require financial assistance.