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Todd Villarrubia

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How to Earn the Maximum Social Security Benefit in 2024

Posted On: February 7, 2024

By: Todd Villarrubia

Todd M. Villarrubia, an authority in wealth planning and preservation, brings over 30 years of in-depth, experience to the complex challenges of safeguarding familial and individual wealth. Based in New Orleans, Louisiana, his expertise is not only recognized in the local community but also reverberates within the legal industry.
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Ways to increase your Social Security benefit include earning equal to or more than the Social Security tax limit for as many years as possible and delaying your application for benefits.

The amount received in Social Security benefits impacts most retiree’s budgets, says a recent article from U.S. News & World Report, “The Maximum Social Security Benefit in 2024—and How to Earn It.” In 2024, the maximum Social Security benefit is $4,873 per month. However, reaching this number depends on many factors, including the number of wage-earning years, income levels and age when claiming benefits.

The Social Security Administration uses a formula to determine how much you’ll receive each month based on the 35 highest earning years. Working and paying taxes for at least ten years is necessary to qualify for Social Security. In addition, earnings are adjusted or “indexed” to reflect the general rise in the cost of living during the person’s working life.

If your working years include low-income figures, the average will decline, and Social Security benefits may be dramatically less for the full span of your retirement. If you can, working for a few more years may be helpful. Every year you work at a higher income level replaces a lower income level in the calculation.

For those married to a spouse with a long record of high income, it may make sense to take a spousal benefit, which is 50% of the spouse’s benefit. If you were out of the workforce raising a family for many years, you may not have had the opportunity to build 35 years of earnings. Compare your benefit with your spouse to see if a spousal benefit would give you a higher monthly payment.

Wage earners pay Social Security tax based on their income. Employees working for a company generally have a tax rate of 6.2%, withheld from paychecks, and employers pay a matching 6.2% for a combined contribution of 12.4%. Self-employed people pay the entire Social Security tax rate of 12.4% on their income.

Once you reach a certain income level for the year, you’ve maxed out on your Social Security taxes. In 2024, the taxable income limit is $168,600. People who earn this much a year are eligible for the maximum benefit, and someone who earns more gets the same benefit. To attain the highest benefit when claiming Social Security, you’ll need to earn up to this limit or more for at least 35 years.

When you claim benefits matters also. If you start claiming benefits earlier than your Full Retirement Age (FRA), the benefit will be reduced by about 8% each year. The earliest you can apply for benefits is at age 62. Every year you wait after reaching your FRA, your benefits will increase by 8% until you reach 70. If you can wait until age 70 to apply for Social Security benefits, you’ll get the maximum benefit.

Filing at age 70 usually requires an “income bridge”, unless you can cover living expenses and medical costs while you wait to file for Social Security. Some people choose to continue working or use earnings from their retirement accounts.

Reference: U.S. News & World Report (Jan. 12, 2024) “The Maximum Social Security Benefit in 2024—and How to Earn It”

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