If you’re a worker in the United States, you may want to know “What’s the maximum monthly Social Security benefit?” In 2016, Social Security Administration (SSA) reports that the maximum monthly Social Security retirement benefit for someone retiring at Full Retirement Age (FRA) is USD 2,639. SSA reports that FRA is age 66 for people born in 1954 and earlier years.
Your Social Security retirement benefit is calculated on the income you earned over your work years. SSA limits how much of your annual income is used for Social Security tax purposes. That’s why the amount of you earned according to SSA is capped at this limit, and your Social Security monthly retirement benefit is capped as well. Other factors can also affect your maximum monthly Social Security retirement benefit. To estimate your monthly Social Security retirement benefit before submitting a retirement benefits application to SSA, visit the Retirement Estimator at SSA.gov.
Social Security Retirement Benefits
SSA calculates average monthly earnings based upon the 35 work years in which you earned the most money and upon which you paid Social Security tax. SSA adjusts your average to account for wage rate changes over the years. You then receive a portion of adjusted earnings as a Social Security retirement benefit. Review your Social Security Statement online at My Social Security Account.
The maximum monthly Social Security retirement benefit is likely to change each year because of annual cost of living adjustment (COLA) changes and other factors. In 2015, the maximum monthly retirement benefit was USD 2,642, or about USD 31,704 per year:
It’s possible for two retired wage earners to receive up to USD 5,268 per month in Social Security benefits if both worked 35 years and earned maximum income credits each year.
Your Social Security retirement benefit is calculated on individual factors. You or a spouse might not earn the maximum monthly Social Security retirement benefit even if your earnings record spans 35 years and you earned the maximum earnings credits each year in your Social Security account.
Your spouse might not qualify for retirement benefits on his or her own.
Social Security Spousal Benefits
If you’re married, it’s possible for your husband or wife to receive Social Security retirement benefits based upon your benefit account—even if he or she doesn’t qualify on his or her own earnings record:
Your spouse’s retirement benefit can be as much as 50 percent of your primary beneficiary retirement benefit. In 2016, your spouse can earn up to USD 1319.50.
If your spouse individually qualifies for a higher monthly retirement benefit, SSA pays the greater of his or her retirement benefit or the spousal benefit.
The maximum monthly Social Security retirement benefit is dependent on when you request benefits. Claiming benefits before your FRA will lower your Social Security retirement benefits and those of your spouse if he or she doesn’t qualify according to his or her earnings record.
Early Retirement and Maximum Social Security Monthly Benefit
When you request Social Security retirement benefits affects your maximum income. SSA allows you to claim benefits beginning in the month you reach age 62, but you’ll earn less than the maximum monthly benefit you could receive at FRA. For instance:
If you’d receive the maximum monthly retirement benefit paid at FRA (USD 2,639 in 2016) but you request benefits at age 62, your maximum monthly benefit is USD 2,102.
If you decide to wait to request benefits, up to age 70, your maximum monthly retirement benefit increases to USD 3,576 in 2016.
There are many reasons you may want to claim early retirement benefits at age 62. If you decide to claim early retirement benefits, your monthly benefit amount is lowered by a statutory percentage based upon how many months you’ve got until reaching FRA:
If you claim retirement benefits in the month of your 62nd birthday, you’ll receive about 75 percent of your maximum Social Security retirement benefit.
Unfortunately, the same rule will apply to your spouse’s benefit request if he or she is claiming against your Social Security beneficiary statement.
It’s worth your careful consideration before deciding to earn additional income after you claim early retirement benefits.
Earned Income and Social Security Retirement Benefits
If you claim early retirement benefits, SSA will lower your monthly retirement benefit if you work and earn more than a certain amount. The monthly limit may change from year to year:
If you earn more than the monthly limit, you’ll lose USD 1 for each USD 2 over that year’s limit.
In the year you reach FRA, the limit increases and the amount you lose decreases: you lose USD 1 for USD 3 over the earned income limit.