Imagine taking home around $62,000 annually in Social Security benefits. For some of the wealthiest recipients, this is a reality. It’s not just about having a high salary during your career; it’s also about understanding how Social Security benefits are determined.
If you’re looking to benefit from this, you’ll need to consider three key strategies. If you haven’t signed up for Social Security yet, it’s a good time to start laying the groundwork.
1. Work for a Minimum of 35 Years Before Retiring
The amount you receive from Social Security is based on your highest 35 earning years, adjusted for inflation. This calculation is known as Average Indexed Monthly Earnings (AIME).
Should you work less than 35 years, there’s a chance you can still get benefits, but they might be lower than expected. The Social Security Administration includes years with no earnings in the AIME calculation, which can reduce your benefits.
Conversely, working beyond 35 years has no drawbacks. If you make less in those additional years, it won’t negatively impact your average income. In fact, it’s likely that you’ll earn more as retirement approaches compared to earlier in your career, and earlier low-income years will be dropped from the calculation.
2. Maximize Your Taxable Income During the 35 Highest-Earning Years
To get the maximum Social Security check, you also need to have paid the highest taxes on your earnings during those 35 years. While many pay Social Security taxes on all their income, wealthy individuals often don’t.
There’s a limit to how much of your income is taxed for Social Security. In 2025, this will be $176,100, but it goes up slightly every year. The highest possible Social Security benefit is currently $5,108 monthly, and you need to hit or exceed this threshold each year.
This can often hinder people from maximizing their benefits, but knowing this can help you strategize. Anything you do now to enhance your income can contribute to higher Social Security benefits as long as you remain under the taxable cap.
3. Delay Claiming Social Security Until Age 70
You become eligible for Social Security at age 62, and many choose to enroll right away. However, that can reduce your benefits by as much as 30%. There’s a penalty for claiming benefits before reaching Full Retirement Age (FRA). If you were born after 1960, your FRA is 67, while older individuals might be eligible at younger ages.
There’s also an option to delay your benefits beyond the FRA, which allows your check to increase until you reach maximum benefits at age 70. If you’re looking for the largest possible payment, waiting until then is the way to go.
That said, you’ll need to cover your expenses until you reach age 70. If that’s not feasible, early registration might be necessary. If you’re facing health concerns or don’t expect to live long, applying early could be smart. But if those factors don’t resonate with you, waiting after reaching FRA could yield higher benefits over your lifetime.
Ultimately, there’s no single right time to apply for benefits. Just make sure to consider how your age at application and the factors mentioned will influence your check.
