Is the $4,873 maximum Social Security benefit really a fantasy?
If you’re reading this, you already know that the largest monthly benefit a retiree can receive from Social Security in 2024 is $4,873, up from $4,555 in 2023.
How many people actually collect full-size checks anyway? There aren’t many. Most people will receive noticeably less money, even if they have earned above average for most of their working years.
Who is collecting these big Social Security benefits anyway?
To receive up to $4,873 per month in Social Security benefits in 2024, current and future retirees must meet three requirements.
The first two of the three criteria are very simple. Only retirees who are 70 years of age or older at the time they file for benefits are eligible to receive Social Security’s maximum retirement benefit, and only individuals who have earned at least 35 years of work-based wages are eligible to receive the maximum monthly benefit. payment. What about other people? Forget it.
The problem is that even if you meet the first of these two requirements, the third criterion will likely put you out of contention. The third criterion requires that you have worked for 35 years and earned significantly above average.
What does this mean in dollar amount terms? It depends on the year in question. The threshold increases each year to keep pace with inflation. This year’s taxable wages are $160,200. Last year, that figure was $147,000. Next year’s minimum amount is $168,600. To receive a $4,873 monthly check from Social Security, you would need to earn a similar inflation-adjusted amount for at least 35 years. The table below shows the minimum taxable income figures for each year since 1985.
| year | taxable income limit | year | taxable income limit |
|---|---|---|---|
| 1985 | $39,600 | 2005 | $90,000 |
| 1986 | $42,000 | 2006 | $94,200 |
| 1987 | $43,800 | 2007 | $97,500 |
| 1988 | $45,000 | 2008 | $102,000 |
| 1989 | $48,000 | 2009 | $106,800 |
| 1990 | $51,300 | 2010 | $106,800 |
| 1991 | $53,400 | 2011 | $106,800 |
| 1992 | $55,500 | 2012 | $110,100 |
| 1993 | $57,600 | In 2013 | $113,700 |
| 1994 | $60,600 | year 2014 | $117,000 |
| 1995 | $61,200 | 2015 | $118,500 |
| 1996 | $62,700 | 2016 | $118,500 |
| 1997 | $65,400 | 2017 | $127,200 |
| 1998 | $68,400 | 2018 | $128,400 |
| 1999 | $72,600 | 2019 | $132,900 |
| 2000 | $76,200 | 2020 | $137,700 |
| 2001 | $80,400 | 2021 | $142,800 |
| 2002 | $84,900 | 2022 | $147,000 |
| 2003 | $87,000 | 2023 | $160,200 |
| 2004 | $87,900 | 2024 | $168,600 |
Data source: Social Security Administration.
The good news is that there is no requirement that you have earned this amount in the last 35 years in question, or that you have earned this amount sequentially. If you’ve met or exceeded these criteria for 35 years before applying, you may be eligible for at least a check of up to $4,873 per month.
You can make your retirement fantasies a reality
Don’t beat yourself up if you don’t or don’t cash the biggest check that Social Security pays retirees. You are hardly alone. In fact, less than 14% of Social Security retirement beneficiaries save more than $2,600 each month, and most of them bank much closer to $2,600 than $4,873. The average payment this year is approximately $1,800, with various recipients receiving monthly checks ranging from $900 to $1,500.
If you don’t qualify or are one of the many people who don’t qualify for these big checks, don’t worry too much. There are many things you can do for yourself at wages well below Social Security’s annual taxable income limits, which can help you build up a significant retirement savings for your golden years. The key is to do a little number crunching. That means figuring out what you need to live in retirement, figuring out how much you’ll need to produce that amount in the future, and then determining how much you need to save regularly between now and then. And to achieve your goals.
Let’s work through an example to illustrate the idea.
Let’s say your retirement income goal is $5,000 per month. You’d need about $1.5 million to generate that amount reliably and permanently through dividends and interest payments. But how do you save $1.5 million? This depends on how much time you need to save and grow your money while contributing to your retirement fund. Assuming you invest in the stock market, saving $750 per month for 30 years would be successful. If you have 40 years, you can get there for just $300 a month. If you only have 20 years to reach your goal of $1.5 million, you’ll need to save about $2,000 each month. Of course, the earlier you start, the better!
But even if you can’t start early or pocket that much money right away, at least start somewhere. Something is better than nothing!
Also, keep in mind that even if you’re not on track to receive Social Security’s biggest check, there’s a chance you’ll receive something from Social Security when you’re ready to retire.
Only worry about what you can do do about something
The point is that there really isn’t much more you can realistically do to secure the maximum monthly Social Security payment in retirement than you already are doing. It may seem like a good idea to earn more, work longer, and wait longer to receive benefits. But it’s much easier said than done.
It’s not as important as you think.
Participation in the Social Security program is required, but you typically earn much less than what you would typically earn by investing your Social Security contributions in the stock market (if it is optional). That’s why you’ll want to invest as much as possible from your paycheck after deducting FICA contributions from your paycheck. You may find that you don’t care how big your final Social Security check will be or not.
