Here’s exactly how to optimize for Social Security’s monthly maximum of $4,194 | Smart Switch: Personal Finance

(christy bieber)

In 2022, the largest monthly retirement check sent out by the Social Security Administration is $4,194 per month. This is well above the average benefit of $1,657. Obviously, if you can get a check that big, it will go a long way toward providing you with financial security in your later years, although you probably won’t be able to live on Social Security alone.

So how can you put yourself on the path to such a big payout? These are the steps you need to follow.

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Plan to work for a long time.

The Social Security benefit formula entitles workers to receive a monthly payment equal to a percentage of their Average Indexed Monthly Earnings (AIME). AIME is your average monthly wage based on your earnings in the 35 years in which you earned the most money, after adjusting each year’s wages for inflation.

If you don’t work for at least 35 years, your AIME on which benefits are based will be reduced. The reason for that is simple. Every time you include zeros when calculating an average, you reduce it. And zeros will be included in your AIME calculation for any years in which you fell short.

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Most people work that long, but you’ll need to make sure you do if you want a job. $4,194 Social Security Benefit. In fact, it is very likely that you will need to work even more extensive for reasons explained below.

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Build strong career skills that will earn you a sizeable income

If you want to get the maximum benefit from Social Security, it’s not enough to work for 35 years or more. During each of those relevant years, you must earn something called the “maximum taxable wage,” also known as the “wage base limit.”

This limit is the maximum amount of income each year that is subject to Social Security tax. Earnings above that are not taxable and also do not count in calculating your AIME. The existence of this limit is the reason why there is a cap on the monthly fee. social security checks people receive. In 2022, for example, the maximum taxable salary is $147,000. If you earn $148,000, you would only have $147,000 included in your AIME and it would be used to calculate your monthly Social Security check.

The salary base limit changes over time, but it is always the inflation-adjusted equivalent of this amount. And only those who earn the most in the country have equal or higher incomes. If your earnings in only one of the 35 years included in your AIME calculation do not meet the limit, you cannot get the maximum benefit of $4,194.

Now, this doesn’t mean you should hit the limit for your entire run. Let’s say, for example, that you earn less in the first two years as you go along. You’d need a 37-year career history to be on track for the highest possible payout in this case, so each of the 35 years included in his formula was as high as possible.

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It can be hard to earn that much money. So if you want to make sure you optimize for the maximum benefit of $4,194, you’ll need to develop career skills that will make you one of the highest earners in the country.

Prepare for late retirement

You don’t earn the maximum monthly Social Security benefit single receiving paychecks equal to or greater than the highest taxable wage each year. This will allow you to maximize your standard Profit by earning the maximum AIME used to calculate it.

But the standard benefit is below the highest possible monthly benefit. This is because it can be increased by delaying the time you claim your payments. Social Security check amounts are based on both your earnings history Y the age at which you apply for benefits. If you wait until age 70, your potential payment will increase each year after age 62 when you are first eligible.

If you can’t get by without Social Security checks and want the maximum monthly benefit, you’ll have to postpone retirement until you can get your payments. That would mean staying on the job until you’re 70, which is much later than most people retire.

As you can see, there are a lot of difficult tasks on your plate if you want a monthly Social Security check of $4,194. In fact, it may be impossible for you to achieve all of them. It may be much easier to simply accept that your retirement benefits will be much lower than this amount and focus on building a large amount of savings to supplement the income these benefits provide.

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