Social Security • February 16th, 2020

What's the maximum I can receive from my Social Security retirement benefit?

Gail Kellner

Key Takeaways
  • Social Security is an inflation-proof, guaranteed source of income that will last the rest of your life.
  • The absolute maximum monthly benefit you can earn from Social Security in 2020 is $3,790.
  • Your Social Security benefit will be based on your highest income earning years and the age you take benefits.

When you’re beginning to plan for retirement, you naturally want to know how much income you can count on. Social Security is inflation-proof, guaranteed income that lasts your entire life, so it’s important to get the largest payout possible. Let’s take a look to see what Social Security payments look like in 2020.

What is the maximum I can receive from my Social Security retirement benefit?

The SSA (Social Security Administration) has a table to help you determine the social security max for 2020. The numbers below are accurate as of February 11, 2020.

Age at retirementMaximum monthly benefit
62$2,265
65$2,857
66$3,011
70$3,790

This doesn’t mean that if you retire at 70 in 2020, you’ll get a $3,790 check every month. The maximum is for people who earned a high income for at least 35 years.

Tip: Social Security payments are typically increased by a small percentage every year. These increases are called cost-of-living adjustments (COLAs). Social Security is often seen as the foundation of retirement income, because it is gauranteed and inflation proof.

How Social Security works

Social Security is based on the money you earn over your entire working life. You have to have earned at least 40 work credits. You earn work credits by… well, working. The maximum amount you can earn in a year is four credits. Each credit is earned by making $1,410 in taxable income. So, if you earn at least $5,640 a year, you earn the four credits and if you earn at least that much for ten years, you qualify for Social Security benefits.

SSA takes your 35 highest earning years to calculate the average indexed monthly earning (AIME). They take the average amount you earned and adjust for wage growth and inflation to come up with a monthly amount. You can see the graph SSA uses here.

They then apply a formula to arrive at your basic benefit, also called your primary insurance amount, which is how much you would receive at full retirement age. If you retire before that (between age 66 and 67, depending on when you were born) your benefit will be reduced.

The maximum taxable income for 2020 is $137,700 (it goes up a little each year, to adjust for inflation). At this income level, you earn the maximum benefit available based on your age. However, you can’t earn more than $3,790 in 2020, even if you earn more than the maximum. The average Social Security check is currently $1,503 a month.

Supplemental Security Income (SSI) benefits are available to people aged 65 and over who meet financial limits. It comes from the Federal Income supplement program, which is a different department than Social Security. You can collect SSI if your benefits at retirement are below a certain level, and if you are denied you can file an appeal.

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Maximum benefits received if you wait until age 70

If you retire before full retirement age, you’ll receive less money. The SSA figures you’ll be claiming benefits for a longer period of time, so they compensate by paying you less money each month. We generally advise that you wait until at least full retirement age to claim benefits. If you can put off retirement until age 70, that’s even better, because you’ll be eligible for delayed retirement credits.

Delayed retirement credits are based on your date of birth and the number of months you delay taking retirement benefits. The chart explaining how much more you’ll get based on how many months you delay can be found here.

Your benefits go up by about .7% a month for every month you delay, up until age 70. So, if you retire at 67, your payout will be 108% of your monthly benefit, and if you wait until age 70, you’ll get 132% of your benefits. This lasts the rest of your life.

If you were to receive $1,000 at full retirement age, you would get $1,320 by waiting until 70. That’s a significant increase, so if at all possible, it really pays to wait.

Planning for retirement is confusing at best. You should talk to a Certified Financial Planner before deciding when to take benefits. A Certified Financial Planner from Retirable can take a look at your overall financial picture and can help you get the most out of retirement.

Author

Gail Kellner

Gail Kellner lives with her husband, two sons, and various fur-children. She writes about personal finance and insurance mostly, with a little bit of parenting thrown in. She also writes YA Fantasy fiction in her spare time, and her first YA novel will be published later this year.