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How Is the Maximum Social Security Benefit Calculated?

Retiring soon and wondering what the max Social Security benefit is for 2022? We’ve got you covered.

Written by Jess Ullrich / July 1, 2022

Quick Bites

  • The max Social Security benefit for 2022 is $4,194/month.
  • Chances are you won’t earn the max benefit—unless you’re retiring at 70 and your total earnings equaled or exceeded $147,000 a year for 35 years.
  • Calculating your monthly Social Security benefits isn’t easy, but it’s possible.

Social Security was designed to create an important safety net, but the size of your safety net in retirement will depend on a few different factors. Your ongoing income, age and year you retire will all play an important role. And we’ve got an unfortunate spoiler alert for you: You’re probably not going to get the maximum social security benefit.

Read on to learn how Social Security benefits work, how they’re calculated and why collecting the max is complicated.

Inside this article

  1. The max
  2. On Social Security
  3. The calculations
  4. How to get the max

The max

Each year, the Social Security Administration (SSA) establishes new maximum Social Security benefits. These figures take lifetime earnings into account—which we’ll get into in a minute—and are adjusted based on cost of living changes over the years. So your initial monthly benefit could be slightly different than your future benefit.

For instance, let’s say your Uncle Jim retired in 2017 at age 65. His initial benefit would’ve been $2,542/month (we’re assuming here that he met certain earnings criteria). However, due to cost of living adjustments, his maximum monthly benefit would be $2,905 in 2022. If he waited until age 70 and retired in 2022, his maximum monthly benefit would increase to $4,194.[1]

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Here’s a look at the maximums for different ages over the past five years:

Retirement at age 62 - max benefit amount (2022) Retirement at age 65 - max benefit amount (2022)Retirement at age 70 - max benefit amount (2022)
2017$2,461$2,905$4,043
2018$2,418$2,901$4,143
2019$2,408$3,005$4,109
2020$2,430$3,064$4,066
2021$2,461$3,008$4,125
2022$2,364$2,993$4,194

A little bit on Social Security

Unfortunately, most people won’t be able to get the max Social Security benefit like your good old Uncle Jim. That’s because the maximum figures are based on the total of your highest 35 years of earnings.

So to get the max benefit for 2022, Uncle Jim would’ve needed to earn at least $147,000 annually (taxable maximum amount) in his top 35 earning years. During that time, he would’ve contributed the maximum possible amount toward Social Security and his employer would’ve done so as well. Note that the taxable maximum amounts change over time based on cost of living adjustments.

Here’s a look at how taxable maximum amounts have changed in the past five years:

YearAmount
2018$128,400
2019$132,900
2020$137,700
2021$142,800
2022$147,000

How such things are calculated

Another quick spoiler alert: There is no easy way to calculate your Social Security benefits!

These calculations get complicated because wages fluctuate over time and there are several steps in determining monthly benefit amounts. But we’re going to try our best to break it down for you.

To start, the SSA established a national average wage indexing graph, which is clickable and lets you see examples of average annual earnings and how they’ve changed over time. These amounts are then used to calculate an indexing factor to help bring earnings up to current wage levels.

So let’s say my dad earned $13,587 back in 1982 and retired in 2022. (Note that our calculations are based on SSA examples). To calculate the indexing factor for 1982, the SSA would look at national average earnings for 2020 (they haven’t calculated them for 2021 or 2022 yet; the average is $55,628.60) and divide that figure by the national average earnings in 1982 ($14,531.34.)[2]

55,628.60 / 14,531.34 = 3.8282

Then, they’d multiply that amount by his earnings for 1982 to calculate his indexed salary:

3.8282 X 13,587 = $52,014

The SSA calculates indexed salary for each year you worked to figure out the total you earned in your top 35 highest salary years. Then, they add up your total salary for those 35 years, and divide it by the number of months in 35 years to get an average indexed monthly earnings (AIME) amount.

So lets say my dad earned a total of $1,950,355 in his highest 35 years. To calculate AIME, we’d take that figure and divide by 420 (35 X 12):

1,950,255 / 420 = 4,623

But wait, there’s more!

My dad wouldn’t actually get $4,623/month because there’s another step in the total benefit calculation.

The SSA also calculates primary insurance amount (PIA) bend points each year and uses them to help determine actual monthly benefits. While we won’t go into how those PIA bends are calculated because this is getting long-winded, the PIA bend points for 2022 are $1,024 and $6,172. (You can learn more about how those are calculated and the PIA formula here.)

In my dad’s case, his initial benefit (after factoring in PIA bend points/formula and assuming he retired at 65) would be $2,079/month. Of course, this benefit will likely fluctuate over time based on cost of living adjustments, so it could be higher or lower in subsequent years.

How to get the max

If you’re interested in getting the maximum possible Social Security benefit in retirement, there are a couple of things you can do or consider:

Retire at a certain age

In general, if you retire when you’re older, your maximum benefit will be higher. So for someone retiring at 65 in 2022, the max benefit would be $2,993. But for someone retiring at 70 in 2022, the max benefit would be $4,194.

Benefit amounts increase thanks to the additional years of contributing to Social Security. You’d need to decide if waiting longer to retire makes sense for your situation, though. Think about whether it’s worth it for you.

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Plan way ahead when it comes to your earnings

We know that Social Security calculations are pretty complicated, but the bottom line is that they’re based on your top 35 highest earning years. So if you’ve got a long time horizon before retiring and you want the best chance of getting the maximum benefit possible, consider increasing your earning potential.

Obviously, the amount you can earn will be based on the career path you choose, your location and other factors, so this may be outside your control. But it’s helpful to think about as you’re looking ahead toward retirement.

Article Sources
  1. “Workers with Maximum-Taxable Earnings.” U.S. Social Security Administration. https://www.ssa.gov/oact/cola/examplemax.html
  2. “National Average Wage Index.” U.S. Social Security Administration. https://www.ssa.gov/oact/COLA/AWI.html

About the Author

Jess Ullrich

Jess Ullrich

Jess Ullrich is a personal finance writer who's been creating online content since 2009.

Full bio

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