(Mark Blank)
Did you know that the average Social Security check in 2022 is only $1,657? That’s less than half of the absolute maximum interest of $4,194 and a fraction of the average American household’s expense of $5,111.
While the average benefit is shockingly low, maxing out shouldn’t be the goal because the harsh reality is that the vast majority of Americans entering retirement will not get that amount.
Here’s a look at why this is, as well as why it’s important to understand how to calculate your monthly benefit for retirement planning.
Image source: Getty Images.
Here’s how much you need to make
If you aspire to one day you get the maximum social Security Benefits You will need to earn at least a Social Security Administration contribution and benefits, which are $147,000 in 2022.
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The base contribution and benefits are the annual earnings that an individual needs to get the most out of when they retire.
On the surface, while $147,000 is a great salary, it doesn’t seem so unrealistic—until you learn that you’ll need to earn the contribution and benefits base for at least 35 years in order to increase your maximum monthly checks.
The current rule is likely to increase next year because the Social Security Administration adjusts the figure on an annual basis to Inflation account.
As for context, here’s how it has changed over the past decade.
|
year |
amount |
|---|---|
|
2012 |
110,100 dollars |
|
2013 |
$113,700 |
|
2014 |
$117,000 |
|
2015 |
$118,500 |
|
2016 |
$118,500 |
|
2017 |
$127,200 |
|
2018 |
$128,400 |
|
2019 |
$132,900 |
|
2020 |
137,700 dollars |
|
2021 |
$142800 |
|
2022 |
147,000 dollars |
Data source: Social Security Administration.
For those close to retirement, here’s a file useful chart It details the contribution and benefits rule dating back to 1937.
It is not enough to be a high income earner on your own
Even if you can earn a high salary for 35 years, you will also need to wait until age 70 to qualify for the maximum benefit of $4,194.
For most of us, the hoops to jump through are simply not realistic. that’s good.
While maximum benefit seems tempting, it is wise to focus on how to maximize future benefits rather than pursuing an almost unattainable goal.
Delaying claiming your benefits for a few years, especially if you are in your highest-earning years, can have significant effects on your monthly Social Security income.
If you are far from retirement, consider taking some courses to learn new skills in order to increase your earning potential. Not only will this allow you to save and invest more, but it will also allow you to Increase your Social Security benefits in the future Since your payments are counted from 35 years of the highest earnings.
Keep your eyes on the ball
Learning what is needed to get the most out of Social Security can be frustrating, but remember that very few Americans will get that amount.
Your focus should be on What you can do to increase your benefits As much as possible.
Once you understand that future retirement income is tied to how much you earn, how long you work, and when you claim your Social Security benefits, you’ll find clarity in your career decisions over the course of your working life.
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