The maximum monthly benefit Social Security recipients can receive in 2024 is $4,873. But don’t fool yourself: most seniors receive much less money each month. The average retired worker earned just $1,915 per month as of April.
You may be eager to do what you can to pursue the maximum monthly Social Security benefit. But rather than spinning your wheels in that regard, you might be far better off focusing on building a solid retirement nest egg.
The maximum benefit of Social Security is difficult to achieve
To collect the maximum amount that Social Security pays each month, you must do three things:
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Working for at least 35 years
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Earn the equivalent of the salary cap each year (this year that cap is $168,600)
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Postpone your Social Security application until age 70
You can push yourself to stay in the job market long enough to reach a 35-year earnings history. And you can also force yourself to keep working to delay filing for Social Security until your 70th birthday.
But the fact is, if you don’t earn enough throughout your career to qualify for Social Security’s highest monthly benefit, you won’t get it. It’s that simple. So to some extent, chasing that maximum benefit can end up being a serious waste of your time and energy.
Focus on the things you do can check
Over the years, your employers may only be willing to pay you a certain wage. But you can make a conscious decision not to spend your paycheck in its entirety and instead allocate a large portion of it to your 401(k) or IRA. You can also invest your savings heavily in shares during your working years, so that you can generate good returns in your portfolio. Over time, the amount of savings you can build can be enormous.
If you save and invest €500 per month over 40 years and your portfolio generates an average annual return of 8%, which is slightly below the stock market average, you would end up with more than €1.5 million with can retire.
If you then decide to withdraw 4% of your savings balance each year in retirement, that’s an annual income of $60,000 – which is comparable to what Social Security would pay you if you qualify for the maximum monthly benefit . Although it may not be in your power to achieve that maximum benefit, it is certainly in your power to put money aside for your retirement and choose smart investments.
A huge Social Security benefit during your retirement would certainly be nice to have. And working longer and building skills to grow your earnings can be two effective ways to get one.
If you realize you won’t get the highest Social Security benefit, don’t worry. If you play your cards right, you can generate enough income to fully enjoy your retirement without even having to factor those monthly benefits into your budget.
The $22,924 Social Security bonuses that most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could give your retirement income a boost. For example, one simple trick can earn you as much as $022,924 more… every year! Once you learn how to maximize your Social Security benefits, we think you can retire confidently, with the peace of mind we’re all looking for. Click here to find out how you can learn more about these strategies.
View the “Social Security Secrets” ›
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Don’t chase the maximum benefit of Social Security. Do This to Retire a Millionaire was originally published by The Motley Fool
