Hi Larry, When I started to receive SS benefits in Jan 2019, I received the maximum FRA (+4% for 6-month deferral) amount at that time. I’m continuing to work with a salary above the FICA yearly maximum; however, my benefit is no longer the maximum. How is the maximum benefit calculated and can I expect an adjustment later this year? Thanks, Paul

Hi Paul,

The maximum possible full retirement age benefit, or primary insurance amount (PIA), is different for every year of birth. And, a person can continue increasing their PIA if they continue working and earn more in a year than they did in one of the years previously used to calculate their PIA. So, there is no real 'maximum benefit rate'.

Social Security retirement benefits are calculated based on an average of a person's highest 35 years of wage-indexed earnings, and the indexing factors used are different for each year of birth (https://www.ssa.gov/oact/cola/awifactors.html). Since you apparently had a high rate of earnings in the year 2019, those earnings can be used to recalculate your benefit rate effective with your payment for the month of January 2020. Specifically, Social Security will substitute your 2019 earnings for the lowest of the 35 earnings years previously used to calculate your benefit rate. They will then calculate your new 35 year earnings average and use the updated average to determine your new benefit rate.

Social Security processes the benefit recalculations described above on an automated basis in around August or September of each year, so that's when you'll probably be notified of an adjustment in your benefit rate resulting from your 2019 earnings. Social Security would also then pay you any back pay that you have coming for the months from January 2020 until the adjustment occurs.

Best, Jerry