Social Security benefits are an important source of income for millions of retired Americans. The maximum monthly Social Security benefit depends on when you were born and when you start receiving benefits. In general, the maximum benefit increases each year as average wages rise. Understanding Social Security maximums can help you estimate how much you may receive in retirement.
What is the maximum Social Security benefit in 2023?
For someone retiring at full retirement age in 2023, the maximum monthly Social Security benefit is $3,877. This applies to those born in 1943 or earlier who claim benefits at their full retirement age of 66 and 6 months. The full retirement age has been gradually increasing from age 65 for those born in 1937 or earlier, to age 67 for those born in 1960 or later. Claiming benefits before your full retirement age reduces your benefit amount.
How is the maximum Social Security benefit calculated?
The basic Social Security benefit is calculated based on your average indexed monthly earnings over your 35 highest earning years. The benefit formula replaces a certain percentage of pre-retirement income, with lower earners receiving a higher percentage replacement.
For 2023, the maximum taxable earnings amount is $160,200. Workers who earn more than the maximum each year still receive credit for additional earnings up to the next bend point in the benefit formula. The bend points divide average monthly earnings into three brackets. Different replacement percentages apply to each bracket:
| Average Monthly Earnings Bracket | Replacement Percentage |
| Up to $1,170 | 90% |
| $1,170 to $7,349 | 32% |
| Over $7,349 | 15% |
To calculate the maximum benefit amount, the 2023 bend points are applied to the maximum average indexed monthly earnings allowed by the system. For someone reaching full retirement age in 2023, this results in a maximum primary insurance amount (PIA) of $3,877 per month.
How does cost-of-living adjustments (COLA) impact the maximum?
Social Security benefits receive annual cost-of-living adjustments based on inflation. COLAs cause the maximum benefit amount to increase most years. For example, in 2022 the maximum monthly benefit was $3,345 for someone filing at full retirement age. After a COLA increase of 8.7%, the maximum rose to $3,877 in 2023. Higher inflation leads to larger COLAs to help protect retirees’ purchasing power.
Does the maximum change based on when you claim?
Yes, claiming Social Security benefits earlier than your full retirement age reduces the maximum monthly amount you can receive.
For example, for someone born in 1960 with a full retirement age of 67:
- If claimed at age 62: Max benefit is $2,364
- If claimed at full retirement age of 67: Max benefit is $3,877
Claiming as late as age 70 increases the max benefit to $4,555 per month for someone born in 1960. Delayed retirement credits reward those who wait to claim benefits after full retirement age.
Can you get extra benefits for family?
The maximum benefits discussed so far apply to the worker’s own Social Security retirement benefit. However, you may qualify for additional money as a spouse or dependent. The maximum possible family benefit for a retired worker and spouse is 150% to 180% of the worker’s benefit.
For example, in 2023 the maximum spouse benefit is $2,841 per month if the worker filed at full retirement age. The total family benefit depends on the actual benefit each worker earned and various rules. But in general, total benefits are capped at 150% to 180% of the worker’s amount.
What if you also earn a pension?
If you receive a pension from employment where you did not pay Social Security taxes, such as certain government jobs, two provisions may reduce your Social Security benefits:
- Windfall Elimination Provision (WEP)
- Government Pension Offset (GPO)
These provisions can lower the 90% replacement factor in the benefit formula down to 40% for the first income bracket if you have a non-covered pension. So the maximum benefit may be lower for people impacted by WEP or GPO.
Is there a limit on total lifetime benefits?
No, there is no maximum limit on the total lifetime Social Security benefits you can receive. The monthly maximum applies to the benefit you are eligible for at any given time based on when you claim. But there is no limit on how many years you can receive benefits. For example, if you live to 100 and claim at age 62, you could potentially receive the maximum monthly benefit each year for 38 years or more.
How do Social Security maximums compare historically?
While Social Security maximums are higher in nominal dollars over time, the increases in the cost of living reduce the growth in real purchasing power. For example:
- In 1975, the maximum monthly benefit was $1,221
- In 2000, the maximum monthly benefit was $1,435
Adjusting the 1975 maximum of $1,221 for inflation to 2000 dollars results in $3,118. So the real purchasing power of the maximum declined from 1975 to 2000. Cost-of-living adjustments aim to keep pace with inflation but do not restore lost purchasing power.
Could the Social Security maximum go down?
The annual Social Security COLA is based on growth in the Consumer Price Index (CPI). If the CPI declines or has zero growth in a given year, it is possible for no COLA to be paid. In that case, the Social Security maximum benefit would stay the same as the prior year rather than increasing.
It is very rare for there to be outright CPI deflation. The last time a COLA decrease occurred was in 2015, when beneficiaries saw no increase. However, Social Security benefits are protected from outright cuts, meaning the maximum could stay flat but would not actually decrease except under very extreme economic conditions.
Could the Social Security maximum go up faster?
Faster growth in the Social Security maximum benefit is possible if wages start rising faster for higher earners above the taxable maximum. Social Security benefits are indexed to wage growth in the economy.
If top earners start seeing rapid wage growth in coming years, the taxable maximum could increase faster, allowing the maximum benefit to also grow more quickly. However, wage growth has been relatively stagnant for top earners in recent decades, contributing to the decline in the replacement rate compared to past generations.
How do people react to the Social Security maximum?
Reactions to the Social Security benefit maximum vary across different groups:
- High earners may see it as detrimental to their own retirement preparedness since they pay Social Security tax on only a portion of their total income.
- Lower earners may see it as reasonable or even generous compared to their own earnings and retirement savings.
- Retirees may wish the maximum would increase faster to improve purchasing power.
- Policy experts may argue over whether the system favors higher or lower earners and who should pay more tax.
Overall, perceptions often depend on an individual’s career earnings trajectory and sources of retirement income.
Should Social Security raise or eliminate the maximum taxable earnings cap?
Some advocates argue for increasing or eliminating the maximum taxable earnings cap, currently $160,200 in 2023, to fund more generous Social Security benefits.
Arguments for raising the cap include:
- Increase revenues to fund future benefits
- Make system more progressive by reducing the tax advantage for high earners
- Enable higher benefits for all retirees
However, opponents argue that raising taxes on high earners is not necessarily fair either. Removing the cap would also increase future benefit obligations. Alternatives like raising the retirement age also face criticism from those concerned about physical job demands. There are merits and drawbacks to different reform options.
How do financial planners advise higher earners on the maximum?
For clients who had substantial earnings over their careers, financial planners generally emphasize these key points about the Social Security maximum:
- Maximize your own worker benefit by delaying claiming if possible.
- Coordinate timing with your spouse to maximize survivor and spousal benefits.
- Aim to replace about 40% of pre-retirement income with Social Security.
- Fill any remaining income gap with pensions, retirement accounts, passive income and part-time work.
- Consider tradeoffs of different claiming strategies for career couples.
Planners help clients understand how much income Social Security realistically may provide given benefit limits. Higher earners need substantial private savings and diverse income streams in retirement.
Should you count on reaching the maximum benefit?
For most people, planning around the absolute maximum Social Security benefit is unrealistic. Benefits are progressive, so only 6% of men and 10% of women reaching age 62 in 2023 will qualify for the maximum benefit.
A more realistic target is to aim for around 40% replacement of your annual pre-retirement income from Social Security based on your actual earnings history. This benchmark comes from the program’s progressive benefit formula. Building additional retirement income from other sources allows you to maintain your lifestyle.
Who typically gets the maximum Social Security benefit?
Those who qualify for the absolute maximum Social Security benefit typically have two things in common:
- A long career with income consistently higher than the taxable maximum each year. This results in the highest possible average monthly earnings.
- Waiting until an older age such as 70 to claim benefits. Later claiming increases benefits via delayed retirement credits.
Examples could include certain executives, surgeons, corporate attorneys, small business owners, commissioned salespeople, and other high achievers in their field.
In short, maxing out Social Security benefits requires a high, steady income plus patience to delay claiming.
How can you estimate your own benefit maximum?
The easiest way to estimate your own maximum Social Security benefit is to use the Social Security Administration’s Retirement Estimator tool online. You will need to input accurate information about your past earnings history and projected future earnings.
The Retirement Estimator uses your actual tax records to tailor its benefit estimates. It takes into account factors like:
- Earnings above or below the taxable maximum
- Years with low earnings or no earnings
- Different scenarios for future earnings
- Benefits claimed at ages 62, full retirement, or 70
The tool will estimate your personalized primary insurance amount and monthly benefits. Your benefit maximum depends on when you start drawing Social Security.
Speaking with a financial advisor can also help you make reasonable projections. But the Retirement Estimator provides the most accurate early look based on your circumstances.
Conclusion
The maximum Social Security benefit can provide useful context on program rules, but does not reflect most people’s reality. Benefits build progressively based on 35 years of earnings. Checking your estimated benefit can help set appropriate expectations. For high earners, Social Security will likely replace around 40% of prior income. Additional savings and sources of retirement income are crucial to maintain your lifestyle.