Retirees claiming Social Security can receive a wide range of monthly benefits depending on when they claim Social Security, how long they’ve worked, and how much they’ve made during their careers.
In October 2022, the average monthly check for retirees was about $1,676, which comes out to about $20,112 per year. But the maximum monthly benefits check this year is $4,194, which equates to annual benefits of $50,328.
Next year, all Social Security checks will rise 8.7% thanks to the Social Security Administration’s (SSA) annual cost of living adjustment (COLA), which will be particularly large in 2023 due to some of the highest levels of inflation seen this year in more than 40 years.
After the COLA, the maximum monthly Social Security check in 2023 will be $4,555, or roughly $54,660 per year. Here are three steps retirees need to take in order to claim the maximum benefits check next year.
1. Delay benefits for as long as possible
Retirees can claim Social Security benefits at different times of their lives. When you decide to claim Social Security will affect how large your benefits are.
Retirees can start claiming benefits at the age of 62 but their benefits will be discounted because they took them early. For those born in 1960 or after, the full retirement age (FRA), which is the age that retirees can claim the full amount of benefits they are entitled to, is 67.
However, depending on their position in life, retirees might choose to delay claiming Social Security after their FRA in order to increase their benefits. Retirees can delay benefits until the age of 70.
For every month that retirees delay benefits from their FRA, the SSA will increase benefits by 2/3 of 1%, which comes out to 8% for every year that benefits are delayed. So, in order to have any chance at the $4,555 maximum Social Security check in 2023, you will need to have delayed benefits until age 70.
2. Work for at least 35 years
Another box you need to check is working for at least 35 years. That’s because the SSA calculates your benefits by looking at your career earnings over a 35-year period. This is a key number used in calculating a retiree’s primary insurance amount, which is the benefits a retiree would be entitled to at their FRA.
This amount is then the basis for how much in benefits retirees will receive if they claim benefits early or late. But in order to claim that full $4,555 monthly benefit check you need at least 35 years of earnings. Anything below that number will immediately disqualify you from receiving the maximum monthly benefit.
3. Having earnings at or greater than the benefit base every year
This last step is what makes earning the maximum Social Security check so difficult. The Social Security program largely pays out benefits by collecting payroll taxes. The idea is you pay into the program when you are younger so you can collect benefits at the end of your career or in retirement when you are no longer working.
However, there is a limit on the amount of earnings the SSA can tax workers on, which is referred to as the benefit or wage base. For instance, in 2022 that limit is $147,000, meaning if you make $300,000 per year you only pay Social Security taxes on the first $147,000.
Not only do you have to be a high-income earner to hit the benefit base each year but the benefit base rises with inflation. In 2023, the benefit base will jump to $160,200. Now, over your career you might be able to achieve this high level of earnings, but in order to qualify for the maximum check you have to hit the benefit base for all 35 years the SSA uses to calculate your benefits.