Key points
- The maximum monthly Social Security benefit is $3,627 for someone who retires at 67.
- The average monthly Social Security benefit is $1,825.
- Several factors, including your earnings during your working years and your age, determine Social Security benefits.
As you plan for retirement, you might find yourself wondering how much you can expect to receive in Social Security benefits.
Social Security retirement benefits were created in 1935 to serve as a safety net for retired workers. Today, more than 48 million retirees receive monthly Social Security benefits, with an average benefit of $1,825.
Regardless of our line of work, most of us will be eligible for benefits when we reach retirement age. The not-so-great news: That amount probably won’t be enough to live on. But it can provide an important source of income alongside your other retirement savings.
Social Security benefits are calculated using your 35 highest-earning years and a complex mathematical formula.
The full retirement age is 67 for anyone born in 1960 or later. That’s when you can collect your full Social Security benefits. But you can increase or decrease your benefits by collecting as early as age 62 or as late as age 70.
As you plan for retirement, it’s critical to understand how Social Security benefits will fit into your overall financial plan, how much you can expect to receive and how your benefits could be taxed.
What is the maximum Social Security benefit?
In 2023, the maximum amount someone can receive in Social Security retirement benefits is $3,627 per month if they retire at 67. Someone who starts collecting benefits at age 62 can receive a maximum of $2,572 per month. The maximum benefit for someone who starts collecting benefits at age 70 is $4,555 per month.
“To realize the maximum benefit, this would require waiting until age 70 to begin taking benefits and consistently reaching the maximum eligible earnings,” says Brian Kuhn, a certified financial planner and financial advisor with Wealth Enhancement Group. “One’s maximum Social Security benefit is not attained at what’s called their full retirement age, as some believe. The term is misleading — your benefit keeps growing if you wait past the full retirement age and begin taking benefits at age 70.”
Social Security benefits are regularly adjusted for inflation in what’s known as a cost-of-living adjustment (COLA). So it’s unlikely the maximum benefit today will be the maximum benefit when you retire.
The most recent COLA occurred at the start of 2023 when the Social Security Administration increased benefits by 8.7%.
“The recent cost of living adjustment to Social Security is well above recent increases,” Kuhn says. “The 8.7% COLA is actually the highest since 1981, and that’s on top of the 5.9% we had in 2021. These increases, of course, don’t necessarily translate into more spending power for seniors, as their costs could have gone up correspondingly.”
What is the average Social Security check?
The average monthly Social Security retirement benefit is $1,825. How much you get depends on your lifetime earnings and age at retirement.
In addition to a maximum Social Security benefit, there is a minimum benefit. It was enacted in 1972 to ensure that long-term low earners receive sufficient benefits during retirement. As of December 2022, the special minimum benefit ranges from $49.40 for someone with 11 earning years to $1,033.50 for someone with 30 earning years.
How are Social Security benefits determined?
There’s a wide range between the minimum and maximum benefit. So where will you fall?
“The calculation is absolutely not simple,” says Blaine Thiederman, a certified financial planner and the founder of Progress Wealth Management. “The long story short is, they take your highest 35 years of indexed earnings and base the amount they pay you on these indexed earnings to arrive at how much you’re owed at your full retirement age.”
Just as the IRS keeps track of your income each year for tax purposes, the Social Security Administration (SSA) keeps track of your income to determine your future benefits. Your wages are indexed to account for changes in the average wage, ensuring your future benefits reflect the increase in the standard of living that occurred during your working lifetime.
Based on your highest-earning 35 years, the SSA uses a formula to arrive at your primary insurance amount. That’s the amount you’ll receive if you retire at the full retirement age.
How your age affects your retirement benefits
We’ve already talked about your income being an important factor in determining how much you can collect in Social Security benefits. Another critical factor is your age.
The full retirement age is 67 for anyone born in 1960 or later. That’s the age at which you can collect your full benefits. But the SSA allows you to start collecting benefits as early as age 62. Keep in mind, your benefits could be reduced by as much as 30%. On the other end of the spectrum, if you wait until age 70 to start collecting benefits, they will increase.
Deciding when to start collecting Social Security benefits is difficult, and no single answer is right for everyone. It largely comes down to your expected life span, your ability to continue working and your financial situation.
If you expect to have a short retirement due to health issues and aren’t concerned with your spouse’s future ability to pay the bills since they’d inherit your Social Security if they’re lower earning, most people file early because they hope to get some Social Security. But it’s important to recognize that there’s risk in this decision.
The risk is that you, or your spouse who is dependent on your Social Security earnings, will live longer than expected and end up receiving a lower monthly income.
According to Thiederman, waiting until age 70 to collect Social Security can help increase your benefit amount, but you would have to live past age 82 for the extra amount per month to exceed the benefits you didn’t collect for the extra years.
If you’re unsure of the best time to start collecting benefits, a financial planner or retirement planning expert can help.
How are Social Security benefits taxed?
Depending on your situation, you may have to pay income taxes on your Social Security benefits.
“Social Security benefits are taxed unlike anything else in the tax code,” Kuhn says. “A formula determines how much of your Social Security will be considered taxable income versus federally tax-free. The worst-case scenario is that 85% of the amount you receive would be taxable, meaning at least 15% is not.”
The IRS requires that you pay income taxes on up to 50% of your Social Security benefits if you meet either of the following requirements:
- You are a single filer and have a combined income between $25,000 and $34,000.
- You are a joint filer and have a combined income with your spouse between $32,000 and $44,000.
You can expect to pay income taxes on up to 85% of your benefits if you meet these requirements:
- You are a single filer with a combined income of more than $34,000.
- You are a joint filer and have a combined income with your spouse of more than $44,000.
Tip: Your combined income is defined in this context as your adjusted gross income, tax-exempt interest income and half your Social Security benefits.
If you are married and file a separate tax return, you will likely have to pay income taxes on your Social Security benefits.
What can you expect from the Social Security Administration?
You don’t have to worry about any big surprises. The SSA makes it easy to track your future benefits throughout your career.
All you have to do is set up a “my Social Security” account on the SSA website. You can track your future benefits, apply for Social Security, request a replacement Social Security card and manage your current benefits.
Frequently asked questions (FAQs)
The maximum Social Security benefit for someone who retires at age 67 — which is considered the full retirement age for those born in 1960 or later — is $3,627 per month.
The maximum Social Security benefit for someone who retires at age 70 is $4,555 per month.
