How much social security do you get when you retire

For younger investors, Social Security looks to be on shaky ground.

At its current pace, the program will have to begin offering diminished payouts in 2034. While politicians are unlikely to let the program die by the time you retire, experts say it may make sense to start thinking about Social Security benefits as just a small piece of your retirement.

"My mindset is to begin to think about it as a small supplemental income in retirement," says Nick Foulks, director of communications strategy and client engagement at Great Waters Financial.

Still, when you're planning for a certain lifestyle in retirement, it would be good to know what that income might look like. Here's how Social Security payments are calculated, and how you can find out what yours could be — even if you're years away from retirement.

Check the status of your Social Security benefits now

Social Security benefits are designed to replace roughly 40% of your income, calculated by taking the average of your monthly earnings over your most lucrative 35 working years and adjusting for inflation.

The amount you receive fluctuates depending on when you claim your benefits. For those born in 1960 or later, full retirement age is currently 67. You can elect to receive benefits as early as 62, but retiring early could result in a ding of up to 30% in the amount of your benefit.

If you delay retirement past your full retirement age, you'll receive an 8% annual boost to your payout until your benefit maxes out at 70.

Depending on your financial situation, it can make sense to take Social Security earlier or later. But regardless of when you retire, it's key to ensure that you're getting the maximum benefit that you qualify for. And that means making sure the Social Security Administration has your numbers straight now.

"Make sure you're getting all of your years counted," says Foulks. "Every year, I check my earnings record to make sure they're appropriately counting my income."

The earnings listed for a given year should match your total pre-tax income. Mistakes might arise if you changed jobs or started working partway through the year, Foulks says.

To check your information, create an account on the Social Security Administration's website (you'll have to jump through some hoops to verify your identity) and download your Social Security Statement. This document will lay out what you've earned each year so far as well as what your current benefit would be, were you to claim from ages 62 to 70.

Staying on top of your annual earnings now can save you a lot of grief down the line. Should you spot a discrepancy, you'll have to file a formal request for a correction with the SSA, which will require you to provide documents proving your correct your income.

In other words, stay on top of this now, or you could find yourself having to dig up 20-year-old W-2s somewhere down the line.

Plus, by checking in on the status of your Social Security now, you give yourself a better idea of what you'll need to save to fund the lifestyle you want to live in retirement.

"That can be a guiding light right there," says Foulks. "You may not know all the pieces of the puzzle, but at least you're getting a rough outline of that one."

Sign up now: Get smarter about your money and career with our weekly newsletter

Don't miss: Letting Social Security dry up would be ‘political suicide,’ says retirement expert—but young people still shouldn’t count on it

How we make money

Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.

Bankrate, LLC NMLS ID# 1427381 | NMLS Consumer Access
BR Tech Services, Inc. NMLS ID #1743443 | NMLS Consumer Access

The maximum Social Security retirement benefit that you can receive depends on the age when you begin collecting and your earnings history, among other factors. In 2022, the maximum is $3,345 per month for someone who files at full retirement age (FRA) at age 66. But $4,194 is the absolute highest benefit for those who qualify and delay claiming until age 70.

Key Takeaways

• Qualifying for Social Security requires 10 years of work or 40 work credits.
• For someone at full retirement age (FRA), the maximum benefit is $3,345.
• The absolute maximum benefit that an individual can receive per month in 2022 is $4,194, and to get it, you must wait until age 70 to claim benefits and have been a high earner for 35 years.

How Social Security Benefits Are Calculated

Qualifying for Social Security in the first place requires 40 work credits or approximately 10 years of work. To be eligible to receive the maximum benefit, you need to earn Social Security’s maximum taxable income for 35 years. The cap, which is the amount of earnings subject to Social Security tax, is $160,200 in 2023, up from $147,000 in 2022.

Social Security benefits are calculated by combining your 35 highest-paid years (if you worked for more than 35 years). First, all wages are indexed to account for inflation. Wages from previous years are multiplied by a factor based on the years when they were earned. This calculation gives an amount comparable to buying power based on the current value of the dollar. Accounting for this valuation change is important because a salary of $14,000, for example, was far more impressive in 1954 than it is today.

Once all wages have been indexed, your average indexed monthly earnings (AIME) is computed by dividing the sum of all indexed wages by 420 (35 years expressed as months). If you worked fewer than 35 years, a zero is entered for years when you did not work. The benefit amount is then calculated based on factors that include the year when collection begins, whether you have reached FRA, and whether you continue to work while collecting benefits.

If you have 40 work credits, you are eligible to claim Social Security as early as age 62, but waiting until FRA will result in a much higher benefit. The most that you can receive in 2023 if you start collecting at age 62 is $2,572. Your FRA depends on the year of your birth. For example, if you were born in 1960 or later, your FRA is 67, and if you were born in the 1943–1954 years, it is 66. (But not just 66. For example, for those born in 1956, FRA is 66 and 4 months.). You will receive 100% of your benefits if you wait until your FRA to claim them. If you claim at age 70, vs. at FRA, you get an 8% bonus for each year that you delayed claiming.

Once you reach age 70, there is no reason to wait longer to start collecting—your benefit won’t increase further.

How to Get the Maximum Social Security Benefit

Few people receive the maximum Social Security check from the government. To defy this and potentially become one of a small handful to bag $4,194 per month, you’ll need to be a high earner over many decades and delay receiving the benefits.

The checklist is as follows:

1. Earn at least the maximum wage taxable by Social Security over 35 years: Social Security takes your 35 highest-paid inflation-adjusted years and averages them together to compute your benefits. To be in with a chance of getting the max, you’ll need to contribute the max, which adjusts every year based on the national average wage index, across this time frame.
2. Elect to start receiving Social Security benefits at age 70: Social Security benefits can be accessed as early as age 62. However, to get the maximum, you’ll need to wait until you’re 70.
   

How To Get the Maximum Social Security Benefit You've Earned

Say that someone who turned age 62 in 2021 will reach FRA at 66 years and 10 months, with earnings that make them eligible at that point for a monthly benefit of $1,000. Opting to receive benefits at age 62 will reduce their monthly benefit by 29.2%, to $708, to account for the longer time that they could receive benefits, according to the Social Security Administration (SSA). That decrease is usually permanent.

If that same person waits to get benefits until age 70, their monthly benefit increases to $1,253. The larger amount is due to the delayed retirement credits earned for the decision to postpone receiving benefits past FRA. In this example, that higher amount at age 70 is about 77% more than the benefit that they would receive each month if benefits started at age 62—a difference of $545 each month.

Of course, the best time for someone to start taking Social Security benefits depends on a variety of factors, not just the dollar amount of the benefit. Things such as current income and employment status, other available retirement funds, and life expectancy also must be factored into the decision.

Average Social Security Payment by Age

The average Social Security retirement benefit is significantly lower than the maximum. It was $1,628.17 per month in September 2022, according to the most recent data available from the SSA.

40%

How much of your preretirement income Social Security is designed to replace.

To ensure that benefits maintain their buying power, the SSA adjusts them every year in accordance with changes in the cost of living, For example, the cost-of-living adjustment (COLA) was increased by 8.7% for 2023, compared with a 5.9% increase in 2022 and a 1.3% increase for 2021.

Advisor Insight

Marguerita M. Cheng, CFP®, CRPC®, RICP, CDFA
CEO of Blue Ocean Global Wealth, Gaithersburg, Md.

According to the Social Security Administration (SSA), the maximum monthly benefit paid at full retirement age (FRA) in 2022 is $3,345. Bear in mind that this is the maximum benefit at FRA, but you can defer your benefits and increase your Social Security benefit. Here are two examples:

1. Julia Child retires and delays claiming benefits two years beyond her FRA. She will receive a monthly benefit 16% larger than her primary insurance amount (PIA): (2/3) × 24 = 16%. By deferring her benefits, Julia permanently increased her $1,400 FRA benefit to $1,624.
2. James Brown retires and delays claiming benefits four years beyond his FRA. He will receive a monthly benefit that is 32% larger than his PIA: (2/3) × 48 = 32%. By deferring his benefits, James permanently increased his $1,600 FRA benefit to $2,112.

What Is Full Retirement Age (FRA)?

Full retirement age (FRA) is the age when you are eligible to collect full Social Security retirement benefits, and it is based on the year when you were born. The FRA is 66 years and two months for those born in 1955 and gradually increases to 67 for those born in 1960 and after.

What Is the Average Social Security Benefit?

In September 2022, the average Social Security retirement benefit was $1,628.17 per month, according to the Social Security Administration (SSA). The maximum for that year is $3,345 per month for someone who files at full retirement age (FRA) at age 66 and were high earners for 35 years.

What Are Delayed Retirement Credits?

If you wait past your FRA to collect Social Security retirement benefits, you’ll receive credits for each month that you delay, up to age 70. These credits can increase your monthly payment by 8% a year.

How Much Do You Have To Make To Get Maximum Social Security?

To receive the maximum Social Security benefit, you would need to earn at least the maximum wage taxable by Social Security for 35 years and delay claiming the benefit until you reach 70. The earnings cap adjusts every year based on changes to the national average wage index and is $160,200 in 2023, up from $147,000 in 2022.

Is Social Security Based on the Last Five Years of Work?

No, that’s not true. Social Security benefits are based on your 35 highest-paid inflation-adjusted years and take into consideration the age when you start receiving benefits.

The Bottom Line

The maximum Social Security benefit for 2022 is $4,194 per month or $50,328 per year. However, before rubbing your hands together, it’s important to be aware that most people have little to no chance of getting anything near that much.

The average monthly payout in the U.S. in September 2022 was about $1,628 per month. If you hope to get substantially more than that and receive the maximum, you’ll need to wait until you reach 70 to receive Social Security benefits and be a consistently high earner for 35 years.

How do you find out how much Social Security you will receive?

How much Social Security will I get at full retirement?

Is it better to take Social Security at 62 or 67?

How much will I get if I retire at age 65?