What is the maximum I can receive from my Social Security retirement benefit?
Per the Social Security Administration website, The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2017, your maximum benefit would be $2,687. However, if you retire at age 62 in 2017, your maximum benefit would be $2,153. If you retire at age 70 in 2017, your maximum benefit would be $3,538.
When you’re ready to apply for retirement benefits, use our online retirement application, the quickest, easiest, and most convenient way to apply.
In terms of fully maximizing your benefit, here are exertpts from a piece I wrote on my website:
I participated in a recent webinar presented by Laurence Kotlikoff, an economics profession at Boston University, in which he offered several pointers to the audience on Tips to consider when filing for Social Security.
At STA Wealth, we have been talking for years about how best to maximize your Social Security Benefits – see:
- Claiming Social Security Early
- Social Security – When to Start Them
- Social Security Claiming Strategies for Couples
- Planning for Social Security
- Why it Pays to Delay Taking Social Security
- A recent interview on the STA Money Hour with Andrew Hardwick
As financial planners, our advisors at STA Wealth have a broad understanding of how to advise our clients on maximizing their Social Security benefits – and the answer varies depending on each of our clients own personal circumstances.
Per Mr. Kotlikoff, this had become even more difficult due to recent changes to the file-and-suspend benefit rules of Social Security, which take effect this year and restrict that benefit to a limited number of couples. (The spouse who files and suspends must be 66 years old as of May 1, 2016, and submit his or her request to file and suspend by April 29. The other spouse, who will receive that spouse’s benefit, must be 62 years old as of Jan. 1 of this year.) It’s also because Social Security is complicated, and even the workers at the Social Security Administration may not fully understand it.
With that in Mind, Mr. Kotlikoff has these five pointers to consider before you file for your Social Security Benefits:
1. Social Security Workers Can Get it Wrong (although most are well intentioned):
Therefore, you need to know the rules yourself. “People in Social Security offices don’t seem to understand the new law,” said Kotlikoff, who’s also author of “Get What’s Yours — the Secrets to Maxing Out Your Social Security Benefits.” He then recounted stories of several retirees who were given erroneous information by their Social Security office. We have seen the same issues with our clients here at STA Wealth. So before you apply for benefits have your game plan on how best to maximize your Social Security given your needs and situation:
- Age (of you and your spouse if married),
- Tax and Work/Employment situation,
- Longevity (how long do you think you will live), and
- Cash Flow Needs.
At STA Wealth, we have software to help you maximize your benefits and there are also online tools at www.ssa.gov.
2. Retirees Should Tell Social Security What They Want to Do – Don’t Just Ask
As discussed above, Retirees need to have the right information about their benefits — which we can provide at STA Wealth — and then tell Social Security what they want to do, preferably in writing. They should not ask Social Security workers questions about their benefits and expect to get the right answer, says Kotlikoff.
Mr. Kotlikoff recommends that retirees specify in writing in the remarks section of their application what they want to do, such as claim spousal benefits, and be definitive and clear. “The application form can be misleading,” said Kotlikoff. It says on top that you’re filing for all available benefits even when you’re not always doing that. You can’t undo that statement. The only place to specify … [what you want to do] is in the remarks section.
If someone wants a spousal benefit and the spouse has already applied to file and suspend and won’t take benefits sooner than his or her 70th birthday, “that has to be in writing … definitive and clear,” said Kotlikoff.
3. File Social Security Applications Online Rather Than by Phone or in Person
For most of my career, I have recommended that clients should schedule an appointment in their local Social Security Office – I have had few problems with that. Perhaps that is because my clients have a plan.
However, Mr. Kotlikoff believes thatit may be safer to file for retirement benefits and spousal benefits online. In that case, he believes that retirees can state exactly what they want to do, and specify in the remarks section of the application form. “You can’t write what you want by phone,” said Kotlikoff. Filing online can also avoid the problem of a worker at a Social Security office writing down the wrong information. Widow and child benefits, however, cannot be applied for online, said Kotlikoff.
4. Specify When You Want to Take Social Security Benefits
If you are beginning your Social Security benefits at Full Retirement Age, for those currently filing, it would be age 66, you will need to specify the exact date they want to begin taking benefits in the remarks section of their social Security application. Otherwise Social Security will provide six months’ worth of retroactive benefits in a lump sum, which will have the effect of slightly reducing future monthly Social Security payments.
5. Keep Track of Ex-Spouses if You’re Collecting Their Spousal Benefits
During the webinar, Mr. Kotlikoff recounted the example of an ex-wife who’s 63 and made the grandfather cutoff to collect under file and suspend. She can file for full spousal benefits of an ex-spouse when she reaches full retirement age at 66, then collect those for four years until the larger retirement benefit kicks in at age 70. At that point, if the ex has passed away she can take the larger of two benefits – the divorced widow or the divorced spouse. Per Mr. Kotlikoff, you should keep track whether your ex spouse is still alive.
The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is $2,639. However, the maximum allowable benefit amount is only payable to those who had the maximum taxable earnings for at least 35 working years. Depending on when you retire and how much you made while working, your benefits may be considerably less. The estimated average monthly benefit for "all retired workers" in 2016 is $1,341.
Social Security benefits are calculated by combining your 35 highest-paid working years (if you worked for more than 35 years). First, all wages are indexed to account for inflation. Wages from previous years are multiplied by a factor, based on the years in which each salary was earned and the year in which the claimant reaches age 60, to give an amount comparable in buying power based on the current value of the dollar. Accounting for this valuation change is important, because a salary of $14,000 was far more impressive in 1954 than it is today.
Once all wages have been indexed, the Average Indexed Monthly Earnings, or AIME, is computed by dividing the sum of all indexed wages by 420 (35 years of months – so months when you didn't work, if you worked fewer, than 35 years are figured in as zeros). The benefit amount is then calculated based on factors such as the year in which collection begins, whether the claimant has reached full retirement age and whether the claimant continues to work while collecting benefits.
In addition, the age at which you retire can affect your benefit amount greatly. If you retire at age 66 in 2016, your maximum benefit will be $2,639. However, if you have reached age 67 or older, you will be granted credits for your deferred retirement. In 2016, deferred retirement earns an additional 8% per year over full retirement age, up to age 70, meaning that if you retire at age 69 in 2016, your benefits will be 24% higher than those for someone retiring at 66 with the same earnings history. On the other hand, should you decide to collect benefits before you reach full retirement age, your benefits will be reduced to account for the additional years over which total benefits must spread. For example, if you were born in 1960 or later and your full retirement age is 67, retiring at age 62 would reduce your benefit by 30%. Click here for a Social Security calculator that can give you more personalized information.
The answer depends on which age you file for the social security benefits. For example, assume your full retirement age (FRA) is 66, and the maximum benefit for the FRA in 2016 is $2,639 per mo. Say, if you’re 62 & contemplate to file for an early benefit, you may only get 75% of the full benefit, which is $1,979/mo. On the other hand, if you delay the claim to age 70, you will earn 132% increase, which is $3,483/mo. You can login to the social security website to find out specifically how much your potential benefits may be at various ages. Keep in mind, if your work passes your claiming age, your benefits may be adjusted for an even higher amount, so will the cost of inflation adjustment, but the government will make that decision. Best!
Thank you for the question. Your social security benefit is based upon your earning years essentially. If you maxed out the social security earnings scale then, if you retired in 2016, you would be able to get $2,639 a month. Check out this article to learn more about how your benefit would be calculated, etc.
You can also Estimate Your Benefits by going to the Social Security website and answering some questions about yourself and your income, it will give you a good idea of what to expect when you retire.
Please consider me a resource should you have any additional questions.
That depends on your retirement age. If you were born between 1943 – 1954 then as a percentage, if you retired at your normal retirement age (NRA), you receive 100% of your benefit which in $ terms the max is $2,639. If you retired at age 70 (max retirement age) then you will receive 132% of your normal retirement age benefit, which the max amount for that age is $3,576. Here is a link for the effect of early or delayed retirement https://www.ssa.gov/oact/ProgData/ar_drc.html
Additionally, remember that Social Security is derived using the income you earned (indexed for inflation) and the amount of years you worked. Therefore in order to receive the maximum payment, you would have had to earn the maximum taxable earnings for at least 35 years.
Please use this link from the Social Security Administration for more information https://www.ssa.gov/oact/quickcalc/early_late.html