In 2022, some seniors will receive monthly Social Security checks totaling $4,194. This is the maximum benefit that the Social Security Administration will provide to retirees. It’s also a lot more than most people will get.
If you plan to claim Social Security in 2022 or in the future, it’s helpful to know how your earnings from this entitlement program will develop. Chances are you won’t see anywhere near $4,194 a month from the Social Security Administration. It is helpful to be prepared for this reality.
Who will get the maximum benefit of $4,194?
A very small percentage of Americans get the maximum of $4,194 Social Security Checks available in 2022. If you want to, you must have two things in common:
- They have earned at least the maximum amount taxed by Social Security for at least 35 years of their working life.
- They have waited until the age of 70 to claim a pension.
Now you may be wondering how much is the “Social Security Taxed Maximum”. This is actually the main factor responsible for there being a maximum social security benefit and the main factor that explains why so few people get it.
See, Social Security benefits are based on the average wage earned in the 35 years when your income was highest over the course of your career. But there is a ‘wage base limit’. Wages above that are not taxed by the Social Security Administration and are not included in calculating your average wage. The limit of the wage base thus in fact becomes the maximum amount taxed by social security.
The wage base limit is really high. in 2022, it will be $147,000. But it is revised upwards every year to account for wage growth, so in previous years it was slightly lower. Nevertheless, only about 6% of employees have an income that exceeds the limit every year. Even fewer people do it each one of the 35 years included in their benefit formula. Only those who earn that much for at least 35 years are on track for the maximum benefit. That’s why the vast majority of people don’t come close to hitting the $4,194 maximum.
Even if you manage to earn enough for 35 years, you will also have to wait until 70 to get your first Social Security check if you are trying to get the highest amount available. That’s because Social Security benefits increase for every year you delay claiming age 62 when you first become eligible. Unless you get all the available raises by waiting until 70, you won’t hit the maximum monthly benefit.
How will your benefits stack up?
As mentioned above, your personal benefit will be based on both what you earn during your career and the age at which you begin your checkups.
The greater the difference between your wage and the wage basis per year, the smaller your benefit will be compared to the potential maximum. And the sooner you file for benefits, the more you’ll get less than the $4,194 maximum. To get an idea of what your benefits will be, assume that Social Security will replace about 40% of pre-retirement income. And keep in mind that you’ll significantly shrink your checks if you claim benefits before age 70.
Once you take these factors into account, it should be easy to see that Social Security alone won’t provide enough income to live on – so you’ll need to start saving to top it up if you haven’t already. .