Waiting until age 70 to claim Social Security benefits can result in a significantly higher monthly payment. For many individuals, this additional income can make a substantial difference, particularly for those relying heavily on Social Security as their primary retirement income source.
The increase in benefits for delayed claiming can provide added financial security in later years, helping retirees manage inflation and healthcare costs more effectively. To understand the salary needed to reach the maximum Social Security benefit, it’s essential to know the elements that influence its calculation.
The Social Security Administration (SSA) considers three main factors
Rather than focusing solely on your most recent income, the SSA looks at your entire career earnings, adjusting for inflation up until the age of 60. Once you turn 60, these earnings are no longer adjusted. This approach allows the SSA to calculate a more accurate reflection of your lifetime income, using inflation adjustments to ensure past earnings are comparable to current-day values.
From your career earnings, the SSA selects the 35 years with the highest wages, adjusted for inflation, to calculate an average monthly income. This monthly average is then used in a specific formula to determine your Primary Insurance Amount (PIA), which represents your base monthly benefit. This formula is progressive, which means it’s designed to replace a higher percentage of lower earners’ income than higher earners’ income, a way to provide more substantial support to individuals who may need it most.
Your full retirement age (FRA) depends on your birth year. For instance, those born between 1943 and 1954 have an FRA of 66 years, while for those born in 1960 or later, it’s 67. If you choose to claim your benefit before reaching your FRA, your monthly amount will be reduced. Conversely, if you delay claiming benefits beyond your FRA, your monthly benefit increases until age 70, providing an added incentive for those who can afford to wait.
This increase can be as much as 31% compared to the amount you’d receive if you claim benefits at your FRA, a difference that can substantially impact retirees looking to maximize their income.
Achieving the maximum Social Security benefit
Simply having a high salary for a short period won’t enable you to reach the maximum Social Security benefit. To qualify, you need to consistently earn above a specific taxable wage limit for at least 35 years of your working life. This taxable wage limit represents the maximum amount of income on which the SSA collects Social Security taxes each year. Any income earned beyond this limit isn’t subject to Social Security taxes, and, importantly, doesn’t count toward calculating your retirement benefits.
In 2025, only individuals who have consistently earned above the taxable wage limit can qualify for the maximum benefit. Additionally, this income threshold is adjusted periodically to keep up with inflation and rising standards of living. As these limits increase over time, individuals must also experience corresponding wage increases to remain eligible for the maximum benefit.
For example, if the taxable wage limit rises from one year to the next, you would need to ensure that your income rises in tandem to remain above this threshold. This progression reflects the SSA’s goal of aligning maximum benefits with broader economic changes, maintaining the relative value of Social Security benefits over time.
Additional considerations: birth year and age when you claim benefits
Earning a high salary is crucial, but it’s only one part of the equation for reaching the maximum benefit. The year in which you were born and the age at which you decide to start receiving benefits are also key factors. For example, the maximum monthly benefit of $5,108 will only be available to those turning 70 in 2025, as benefit calculations vary based on the year of birth. The Social Security formula changes slightly over time, which can influence your final benefit amount.
To receive the maximum benefit, you must wait until age 70 before filing your claim in 2025. Claiming benefits earlier than this age will lower the monthly benefit amount. However, if you choose to delay until age 70, you secure the highest possible monthly payout for your lifetime. This decision requires balancing the potential benefits of a larger payout against the need for income during the years leading up to age 70, a choice that depends on individual financial situations and health considerations.
Deciding when to claim benefits can be particularly impactful if you’re in good health and have a longer life expectancy, as the higher monthly benefits will continue throughout your retirement years. On the other hand, for those with health concerns or a shorter expected lifespan, claiming earlier may be a more practical option, even if it means receiving a reduced monthly amount.
Is achieving the maximum benefit realistic?
Qualifying for the maximum Social Security benefit is a challenge that few individuals meet. Only a small percentage of people meet all the necessary criteria: maintaining a high income for at least 35 years, fulfilling the required years of contributions, and waiting until age 70 to claim benefits. Those who do meet these qualifications often have had long, successful careers, frequently with additional retirement savings to support their income needs, and sometimes plan to continue working even beyond age 70.
For most people, aiming for an income level that optimizes Social Security benefits is a sound approach, but it’s also essential to save and invest during their working years. Building a diversified retirement strategy through savings and investments can make a significant difference. This approach provides flexibility, allowing individuals to retire before 70 if desired, without relying solely on Social Security as their primary income source.
A balanced retirement strategy offers the freedom to stop working at 60 or 65, if desired, with Social Security serving as just one component of a broader financial plan. This flexibility can afford retirees the opportunity to enjoy their retirement without the financial stress of depending exclusively on Social Security.
