January 18, 2022

Don’t worry if you don’t get the maximum Social Security benefit. Do this instead

The maximum benefit you can receive from Social Security in 2022 is $4,194. But that’s much higher than what the typical senior receives.

The average Social Security beneficiary in 2022 will receive a monthly payday of $1,657. That is after taking into account the 5.9% Cost of Living Adjustment which came into effect this year.

Now if your goal is to maximum social security benefit once you retire, there are a few things you need to do. Basically, you will have to earn a very high wage for at least 35 years, and you will also have to postpone your application to Social Security until the age of 70.

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Depending on how your circumstances spiral out of control, either one can be a tall order. While you can do your best to build job skills and work hard, you don’t necessarily have to increase your earnings to the point where you qualify for most of the money Social Security will pay out. And while you can certainly plan to apply for benefits at age 70If health problems or layoffs are forcing you to retire early, you may need to apply for benefits earlier.

That’s why fixating on getting stuck on the maximum Social Security benefit may not be the best use of your time or energy. Instead, there is a better way to prepare yourself for a financially sound retirement.

Rely less on Social Security and more on your own savings

Social Security will generally replace about 40% of your income if you are an average earner. If you can defer your application and maintain the program’s maximum monthly benefit, you can score a higher percentage of replacement income.

But in general, you can expect to need about 70% to 80% of your previous salary to maintain a decent standard of living as your time in the job market comes to an end. And since claiming the maximum Social Security benefit isn’t easy, it pays to work on building as big a nest as possible instead.

If you consistently contribute money to a devotee retirement plan and investing your savings wisely and aggressively, you might be able to breed enough of a nest egg that it really doesn’t matter how much Social Security income you get, let alone whether you get the highest monthly benefit or not.

Imagine being able to save $500 a month for retirement over 40 years. If you invested your savings in stocks, you could earn an average annual return of 8% in your retirement plan, since that’s a few percentage points below the market average, leaving you with a nest worth just over $1.5 million .

By extending your savings period or monthly contribution, you can save even more money. Save $500 a month with an average annual return of 8% over 42 years, and you’ll end up with over $1.8 million. Or stick to that 40-year period, but increase your monthly contributions to $700, and you’ve got close to $2.2 million.

Having a bigger nest doesn’t mean you have to give up on growing your Social Security benefits. But it can keep you from getting stressed about the fact that despite your best efforts, the maximum monthly benefit is simply not achievable.

Set realistic goals

Many things have to fall into place in order to qualify for the maximum Social Security benefit. But remember, even if that doesn’t happen for you, you can still manage to get an advantage close to that max $4,194. And if you map out a smart filing strategy while focusing on building a nest, you’ll be financially ready for a very comfortable retirement.


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