Here are the maximum possible Social Security benefits at ages 62, 67, and 70

If you’ve worked a long and highly paid career, you may be in line for the maximum possible Social Security benefit when you retire. But even if you qualify for the largest possible retirement check, the age at which you claim can still have a massive effect on the size of your final check.

There is a huge difference in the maximum retirement benefit of someone who claims as soon as possible at age 62 and someone who waits until age 70 to age 70. between the two extremes.

The discrepancies in the maximum monthly checks received at each of those ages show how valuable it can be to delay benefits as long as possible.

Image source: Getty Images.

Here’s the salary you need if you want the maximum Social Security benefit

The first step to maximizing your Social Security retirement benefit is to earn a high income during your career.

When the Social Security Administration (SSA) calculates your monthly pension, it aggregates your earnings history over the course of your career. It adjusts the earnings in each year before you turn 60 to be comparable to the earnings in the year you turn 60. Any subsequent earnings do not receive an adjustment. Then select the 35 years with the highest earnings and calculate the average monthly income you received in those years.

This average income goes into a Social Security benefit formula to determine the amount of primary insurance, or PIA. PIA is the amount you would receive if you claimed Social Security benefits in the month you reach your full retirement age (FRA), which will vary between 66 and 67, depending on when you were born . Claiming before FRA results in a lower benefit than PIA. You can also defer benefits until age 70 and get a bigger check as a result.

There is an important catch for high earners. Sometimes the SSA won’t count all of your earnings. If your wages exceed an annual limit called the “contribution and benefit base” or “maximum taxable earnings,” the SSA will replace that limit on your earnings record with your actual earnings. That’s because you won’t pay any Social Security tax on earnings above that limit. For 2024, the limit is $168,600.

Earnings above the maximum taxable income for 35 years during your career will likely put you in a position to receive the maximum possible Social Security benefit when you retire. Here are the last 50 years of maximum taxable earnings.

Data source: Social Security Administration.

Here’s the maximum possible Social Security benefit at ages 62, 67, and 70

One of the most important decisions you will face in retirement is when to claim Social Security benefits. Even if you’ve maximized your earnings during your career, it can still be difficult to determine the best age for you personally to claim.

If you file at age 62, you’ll get a nice-sized check up front, but you’ll likely still need to supplement your Social Security income with your personal retirement savings. On the other hand, waiting eight long years until age 70 to start collecting a much larger benefit may not feel worth it to some. Many retirees choose to split the difference and claim when they reach FRA, which will be age 67 for many readers.

Here’s what the maximum benefit looks like for each of those ages in 2024.

Data source: Social Security Administration.

Even though the 70-year-old and the 62-year-old earned comparable salaries over their careers, the 70-year-old ends up receiving a monthly benefit check nearly 80% higher than their younger counterpart. The total difference is about $26,000 per year. That’s enough to pay for a really nice vacation, maybe two, every year.

A small part of the difference in the amount is due to changes in the full retirement age, which are partially offset by the factors used to determine the PIA for each age group. However, someone who turned 62 this year can get up to a 77% increase in their monthly benefit if they delay until age 70.

Is it worth the wait?

If you’re in line to receive the maximum possible Social Security check, it’s probably a smart decision to wait until age 70 to claim your benefit.

First, you probably have enough savings for retirement from your high-paying career. Even if you have to stretch your withdrawal rate a bit to enjoy your early retirement years, it’s probably worth knowing you have a big extra paycheck.

Another important aspect is survivor benefits. If you predecease your spouse, he or she is eligible to collect whatever Social Security you received. As a result, joint life expectancy tilts the odds of collecting more Social Security income over your lifetime to favor delaying as much as possible.

If you retire with substantial assets, there are also potential tax benefits for deferring Social Security payments until age 70. The early retirement years are a great opportunity to position retirement assets to reduce your long-term taxable income through strategies like the Roth. conversions and taking capital gains. This becomes more difficult when you have a steady stream of Social Security income.

Even if you’re not in line for the maximum possible Social Security benefit (yet), it often makes sense to delay benefits until age 70. A 2019 analysis from United Income found that 57 percent of retirees would maximize their retirement wealth by waiting. to claim as much time as possible. Only 6.5% of retirees ended up richer by claiming before age 64. If you can afford to wait a few years before claiming Social Security, it’s often worth delaying, regardless of how big your benefit will be.