Why Is My Benefit Rate Less Than The Maximum Possible Amount?

Mar 7 2019 - 2:40pm

Mr. Kotlikoff, good afternoon. Thank you for providing this service to ask questions about social security.

My question is about the maximum (retirement) social security benefit amount, which I understand is $3,770.00 per month in 2019. Through my online research, I've concluded that only two (2) criteria are necessary to qualify for the maximum benefit amount: 1) delaying benefits until age 70 and 2) having a record of at least 35 years of earnings where the earnings amount meets or exceeds the maximum earnings amount subject to social security tax. Is that correct?

In my case, I should start receiving benefits in April, 2019 (70th birthday month). I am also fortunate to have 39 years of earnings history where my earnings exceeded the amount subject to social security tax.

As you know, the SSA has an online benefits calculator. I entered my detailed earnings history into that online calculator and got a benefit value of $3,649.00 per month at age 70. Separately & independently, I called the local SS office "claims dept" and asked for an expected monthly benefit amount at age 70. The number they quoted was $3,649.00 monthly. It was not a surprise to me that those numbers were the same, since I assumed that the SS website online calculator used the same software program that was installed on the SSA's computers used to generate the expected benefits values. (same assumptions / earnings going in = same software program = same numbers / values coming out).

I'm struggling to understand why my monthly benefit amount is not the maximum value of $3,770.00 per month. Maybe there are other criteria or subtle nuances associated with that maximum benefit amount that I missed in my online research.

I look forward to any insight you can provide. Thank you for your time & consideration. Have a great day.


First off, there is no such thing as a single maximum benefit amount. Since the indexing factors used to calculate Social Security retirement benefits vary depending on a person's year of birth, the maximum possible benefit rate is somewhat different for each year of birth. In other words, the maximum possible benefit rate for someone born in 1950 could be different from someone born in 1951 due to different indexing factors. Such variations are generally relatively small, though. For more information on indexing, refer to the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10070.pdf.

Filing at age 70 does give a person the maximum amount of delayed retirement credits (DRC) possible for their age group, but it's not accurate to conclude that a person would get the maximum possible benefit rate for their birth year simply because they had at least 35 years with earnings at or above the maximum amount subject to Social Security taxes. For example, the maximum amount of earnings subject to Social Security taxes in 1978 was only $17,700, so even after indexing a person earning the maximum amount in 1978 would not be credited as much total earnings as someone who earns the 2019 maximum of $132,900. To receive the maximum possible benefit rate for their year of birth, in addition to filing at age 70 a person would need to have earned the maximum amount subject to Social Security taxes in the 35 calendar years that would produce the highest possible total of indexed earnings for a person with their year of birth.

Furthermore, the maximum possible benefit amount for each year of birth is not a stagnant figure. A person can continue working past age 70 and continue to increase their benefit rate after each year in which they earn more than they did in one of their previous highest 35 years of indexed earnings.

Best, Jerry