In 2021, average Americans will lose $ 90,748 before maximizing their Social Security benefits

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Earning the maximum Social Security benefit can leave you with a generous monthly income. In 2022, for example, the maximum monthly check, $ 4,194, will earn $ 50,328.

But the vast majority of Americans earn much less than it takes to get the maximum benefit from the Social Security Administration when they retire. In 2021, the annual salary of a typical worker is expected to be $ 90,748 less than what is needed to get the biggest Social Security checks.

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Why Americans Fail to Maximize Social Security

To earn the maximum benefit from Social Security, someone has to do two things:

  • Earn the maximum taxable income for at least 35 years. Social Security sets a maximum taxable income, called the basic salary ceiling. This limit exists because benefits are based on the average salary over your top 35 years. Yes all incomes were included in the calculation of this average, people with very high incomes would end up with huge benefit checks. Instead, only income up to that basic salary limit counts, and you don’t pay Social Security taxes on income above.
  • Apply for benefits from age 70, even if you become eligible at age 62. Benefits can be maximized alone if you are earning as many deferred retirement bonuses as possible. This means waiting until 70 years.

It is this first requirement that so many people fail to meet in 2021.

Most people will earn much less than the basic salary limit in 2021

In 2021, the basic salary limit is $ 142,800. If you earn this or more, you are subject to maximum Social Security tax and receive credit for the maximum amount of wages possible.

But most people will fall short of making $ 142,800 this year. The Bureau of Labor Statistics reported that the average annual salary was $ 52,052 in the third quarter of 2021. This means that the average American will earn $ 90,748 less than the salary needed to meet the basic salary limit.

Earning the maximum taxable salary for at least 35 years of your career is a prerequisite for obtaining the most important benefit. Short of any 35 years taken into account in calculating your benefits means that you will not have the highest possible average salary and therefore will not be able to receive the highest possible benefits. With a typical American earning almost $ 100,000 less than that magic number, this helps explain why the medium the retirement benefit in 2022 will be only $ 1,657, less than half of the maximum.

You could always maximize your future benefits, even if you earn less than $ 142,800 this year. But for that to happen, you need to make sure that 2021 doesn’t count among the 35 years that determine your average salary. To do this, you must work at least 36 years in total, earning the maximum taxable income during the remaining 35. And the maximum taxable income increases every year. In 2022, for example, you will need to earn $ 147,000 to reach the goal.

If you were one of those who made a lot less than $ 142,800 in 2021, don’t count on the highest Social Security checks you can get unless it’s a bad year and your income is usually a lot. higher. You can use the mySocialSecurity.gov website to estimate your likely future earnings to get a more realistic idea of ​​what Social Security will actually pay you in retirement, allowing you to plan and save accordingly.


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