Ask Larry

If I File At Age 70 Shouldn't I Expect To Receive The Maximum Benefit Amount?

I intend to file for social security when I turn 70 in December 2022. I retired in 2015. I have contributed the maximum contribution for social security during my working years from 1977 through 2015 - 39 years . Should I not expect the maximum social security of $4,190 when I turn 70 ? When I inquired with social security they provided me an estimate that was $4,090 which is $100 per month less than the max . I understand it is an estimate but upon formally applying for social security , should I expect to receive the max of $4190.

Hi. The short answer is no. First of all, there is no 'maximum' Social Security benefit rate. The highest monthly benefit rate that a person can possibly be paid per month depends on their year of birth and their complete yearly Social Security covered earnings history.

Social Security retirement benefits are based on an average of a person's highest 35 years of Social Security covered wage-indexed earnings. The wage indexing factors vary for each year birth, so the indexing factors for someone born in 1954, for example, are different from the indexing factors used for a person born in 1955. Also, cost of living (COLA) increases are added to a person's Social Security retirement benefit starting with the year after the year they reach age 62. Those types of differences account for why there is no set 'maximum' benefit rate.

In order for you to receive the highest possible monthly benefit amount for someone born in the same year as you, you would need to a) wait until age 70 to start collecting your Social Security retirement benefits, b) have earned at least the maximum amount subject to Social Security taxes in every one of the years leading up to the year in which you claim benefits, and c) continue working and earning at least the maximum amount subject to Social Security taxes in each year until you die. Social Security retirement benefits can be recalculated after every year in which a person has earnings high enough to increase their benefit rate, so people who continue working after age 70 can increase their benefit rate if they earn more than they did in one of the 35 highest earnings years used to calculate their current benefit rate.

Therefore, if you haven't worked and paid into Social Security since 2015, then your monthly benefit rate won't be as high as someone's who was born in your year of birth and who continued earning at least the maximum amount subject to Social Security taxes in the years after 2015.

Best, Jerry

May 26 2022 - 1:36pm
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