What Is the Maximum Social Security Benefit in 2023?
Category: Uncategorized
September 19, 2023 – Quick – What is the maximum Social Security benefit in 2023? $2810/mo., $3035/month, $4193/mo., or $4,555/mo.? And, how much is the average benefit? If you guessed $4,555 as the highest benefit, which amounts to $54,660 a year, you are correct. Compared to the average 2023 recipient’s payment of $1,827, that is an amazing difference!
So what is driving this $2,728 per month disparity? The answer is a combination of 3 big factors.
The first is that the Agency uses your highest 35 earning years to calculate your benefit. If you had zero or very low earnings in some of those years, that will knock down your benefit.
The second challenge is that to get the highest maximum Social Security benefit, you must have met the earnings threshold where FICA stops being collected in all those 35 years. That is pretty hard for even the highest earners, since most people’s early career jobs rarely hit the max. In 2023 the benefit base when FICA stops being collected is $160,200 (it is indexed for inflation and goes up every year – in 1975 it was $14,100). Not that many Americans earn over $160,000 per year, so that makes hitting the maximum Social Security benefits so difficult.
The third factor is your age when you start collecting. If you apply and receive SS benefits at the earliest opportunity, age 62, you will not come close to the maximum benefit, no matter how much you might have earned. Benefits increase for every month you delay until age 70, when the benefit stops growing. If your Full Retirement Age is age 66, your benefit will grow 8% per year until age 70. To give you an idea of the power of that 8% compounding, a person with a $3,000 benefit at age 66 would get $4,081 by waiting until age 70 to claim.
What is the maximum Social Security benefit – bottom line
So, to get to that maximum benefit you have to have 3 things going for you: 35 years of earnings, earnings above the base level in all of those years, and waiting until age 70 to claim. Not many people can check all of those boxes – but is possible for someone who can waits until age 70 and amasses 35 years of earnings above the base. It is certainly possible for someone who works until age 70 and starts consistantly hitting the base level at age 35.
What can you do to get your benefit higher?
Your benefit is not frozen for all time. If you keep working you can increase it by replacing some of your zero or very low income years.
Comments on "What Is the Maximum Social Security Benefit in 2023?"
Louise says:
The article below is also interesting and shows three scenaro's of collecting SS at age 62 at $1400.00 a month, age 67 at $2,000.00 a month or age 70 at $2480.00 a month. It shows at age 76, the person who collected $1400 a month collected more money.
62-76 $235,200 ($1,400.00 a month) (14 years)
6762-80-76 $216,000 ($2,000.00 a month) (9 years)
70-76 $178,560 ($2,480.00 a month) (6 years)
https://www.fool.com/retirement/2023/09/18/the-best-reason-to-take-social-security-long-befor/
Then life expectancy must be factored in and according to the Center for Disease Control and Prevention (CDC) life expectancy has gone down slightly from 77 years to 76.1 years.
https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm
Admin says:
When thinking about life expectancy, it is is important to remember where you are in the journey. At age 65 the average male will live to age 82 and female to 84.5. So you have to add more years to the equation. The COLA is also a factor, people who wait longer will see a higher $ amount each year.
Dan says:
If one is able to not need SS for regular living expenses.....this might be better?
Using the numbers above, if one would take $1400 monthly SS at age 62 and invest it conservatively, a 5% yield would produce a sum of about $165,000 at age 70.
Obviously not an option for all, but certainly something to consider for some.
JCarol says:
During my early 60s I did massive amounts of research from expert sources, examining SS from every possible perspective. The strategy I came up with that's working well for us:
Delayed my husband's SS to age 70, he being the larger earner. Took my SS at age 65 so we could semi-retire at that point instead of working full time. At age 66, he claimed spousal benefits of 50% against my earnings while letting his increase at 8% per year. (That loophole is no longer available.)
Having long-lived parents, we figure at least one of us will make it well past our combined SS break even point of about 76-77 (because he collected 50% of my SS from age 66-70, we did better than the typical break even point of age 78-80).
Now that he's 70, we're collecting both checks (over $5500/month). Our combined SS is sufficient to cover living expenses, thereby preserving our nest egg that's in place to help fund whichever of us is ultimately widowed and loses my smaller SS check.
Semi-retiring at 65 to consulting from home wasn't a hardship. Although we'd planned to stop working at age 70, we've reconsidered. The work is enjoyable and the earnings fund nice vacations, wish-list work around the house, and further feathering of our next egg.
We'll likely continue this work for another couple of years, depending largely on how greatly it affects our taxes.
Stevo says:
I'm currently single, age 65 and I'll wait until I'm 70 because I want to withdraw some money out of my 401K before RMDs kick in. The one thing that I wasn't planning on was the increase in my Medicare part B & D premiums when going over certain income thresholds. Keep that in mind when you do your planning. I didn't know anything about that prior to 65 and I wish I would have hired someone to advise me.