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How to Calculate your Maximum Social Security Benefit

By Lisa Copely 11 April, 2023 3 mins read

There are many methods to maximize your Social Security Benefit. One is to work up until the age of 70. Your earnings will increase and you'll be eligible for more benefits. You can also delay collecting benefits until you reach 70 to maximize your benefit. You will learn how you can calculate your maximum benefit in this article.

Working until 70 maximizes social security benefit

If you're the primary breadwinner in your family, you'll want to wait until you're 70 to collect your Social Security benefits. The good news about this is that your benefit will not be the same as if you had started to collect at 62. The reason is that the average American expects to live nearly 19 more years than he or her 65-year-old self. This means that your Social Security benefit at 70 should be 75% more than the benefit you received when you were 65.

In order to maximize your Social Security benefit, you must work longer. At least 35 years of work is a good goal. Then, you should wait until you start to draw benefits. The monthly benefit you receive will be lower by around 30%, but each year you wait you'll get an additional 8.8% credit towards your retirement. Remember that your benefit is limited at 70. If you're still working, it will result in higher taxes and Medicare Premiums.

Waiting too long to collect maximizes SSI benefit

It is possible to be confused about the rules for when you can receive your Social Security benefit. Delaying your benefits until you reach your FRA (full retiree age) can give you almost 8% extra. Although this delay is not for everyone, delaying your benefit by 12 months can make a big difference in your monthly check. Depending on your personal situation, you might not have the ability to wait so long. Some jobs are physically demanding and may not allow workers to wait as long. Others may simply need the money. Other people may not be able or willing to wait any longer than four years.

Coordination of benefits is a great way to maximize your Social Security payments if you're married. In certain cases, both spouses can claim their benefits on the same earnings record. Some couples choose to split the benefits and each spouse will claim it at a different age. In these cases, the highest earner may wish to delay receiving benefits until later in life. For more information, visit the SSA's website and get an estimate of how much your benefits will be at various ages.

Calculating maximum social safety benefit

The Social Security Administration considers an individual's lifetime earnings when calculating their maximum social security benefits. This includes the average wage rise over the past 35 years. These earnings are then multiplied by a formula that arrives at the basic benefit amount, also known as the primary insurance amount, which an individual would receive upon reaching full retirement age.

SSA provides a benefit calculator online that allows users view a benefit estimate. It is important to fully understand the process of this estimate, as it can differ from actual benefit amounts. The estimate is also less accurate for younger workers as compared to older workers. It is therefore important to know how the maximum benefit calculation is done, especially if you are planning on retiring soon or later or if your earnings have changed in recent years.

The maximum Social Security benefit is determined using the average monthly earnings in the preceding 35 years multiplied by 90%. Then, the remaining earnings up to $6,172 are multiplied by 32% and the earnings over this amount by 15%. Once you have the initial payment amount, you can use the cost-of-living adjustment or delayed retirement credits to increase it.

FAQ

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Statistics

These rates generally reside somewhere around 1% of AUM annually, though rates usually drop as you invest more with the firm. (yahoo.com)
As of 2020, it is estimated that the wealth management industry had an AUM of upwards of $112 trillion globally. (investopedia.com)
According to Indeed, the average salary for a wealth manager in the United States in 2022 was $79,395.6 (investopedia.com)
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