Franklin Delano Roosevelt Eleanor Roosevelt Maximum Social Security via Tony Fisher/Flick

The monthly maximum retirement income Social Security benefit for a person retiring in 2024, at their full retirement age, is just $3,822 per month. Or $45,864 per year. This is well below what the average American family lives off. To achieve this Social Security benefit, you must have had the maximum taxable earnings for a whopping 35 years. It is for this reason, that most people’s benefits will be far less in Social Security benefits. Forget this number if you plan to retire ahead of your full retirement age (likely 66 or 67). Could you live on even the maximum Social Security check?

By David Rae Certified Financial Planner™, Accredited Investment Fiduciary™

Do you think you could live off $3,822 per month? Before you think about that, it’s important to note that the average check for 2024 is just $1,730 per month. I’m going to go out on a limb here and guess that if you are reading this post, you would have a rough time getting by on $1,730 per month. Don’t forget Social Security benefits are taxable. If you make more than $25,000 as a single filer or $32,000 for married couples, you will owe taxes on your Social Security benefits.

It would be difficult, if not impossible, for many people to live off Social Security alone in places like Los Angeles or Palm Springs. The cost of living is just too high. The good news is retirees will be receiving a 3.2% Cost Of Living Adjustment to Social Security benefits in 2024.

Update: New Maximum Social Security For 2024 Announced

The new 2024 Maximum Social Security Benefits. With the Social Security COLA of 3.2% for 2024, the new maximum Social Security numbers are going up next year. For those claiming benefits at age 62, the maximum Social Security benefit per month should be about $2,710. If you wait until your Full Retirement Age, your maximum Social Security benefit in 2024 will be about $3,822 per month. Waiting from 62 to full retirement age increases your amount by around 30% per month.

For those who are either patient, looking to get the maximum Social Security benefits, or perhaps, just working a bit longer, waiting until age 70 will result in the biggest possible Social Security benefit. The maximum Social Security benefit at age 70 will be about $4,873 per month. While earning almost $58,000 per year from Social Security may sound fantastic, if you qualify for the maximum Social Security benefit, this is likely only replacing a small portion of your pre-retirement income.

What If I Wait Until Age 70 To Collect Social Security?

For those of you looking to get the largest Social Security check possible, you will need to wait to begin collecting until you are 70 years old. To put this in perspective, if you were 70 this year and receiving the maximum Social Security benefit, your check would be about $4,873 or $58,476 per year. This translates into a 32% increase in your monthly benefit. The bad news here is to achieve the maximum Social Security check you would have likely been making six figures for many years. This means that Social Security would cover less than half of your pre-retirement income. Do you think it is reasonable to expect to be able to comfortably cut out half your spending in retirement? This would be painful for most people.

The maximum Social Security benefit at age 70 is $4,873 per month in 2024. Or $58,476. While this may seem like a substantial benefit, if you earned enough throughout your working career to get the maximum Social Security benefit at retirement, this will likely translate into a large drop in your standard of living.

How Are Social Security Benefits Calculated?

Your Social Security benefit is calculated by combining your 35 highest-paid working years. Working less than 35 years will lower the benefits you will eventually receive and all of your wages throughout your working years will be indexed to account for inflation. I’m hoping most of you are making more today compared to those who were in the workforce 35 years ago, but there are exceptions to the rule. For example, my father (Mike Rae, Oakland Raiders (winner of Superbowl XI), National Championship with USC ++) played in the NFL and probably made more in the nineteen seventies than he does now. That is definitely the case when you account for inflation.

The Social Security Administration will calculate your Average Indexed Monthly Earnings or AIME. It is computed by dividing the sum of all your indexed wages by 420. Twelve months a year multiplied by 35 years equals 420. Eventually, your actual benefit amount is calculated based on a variety of factors such as the age at which you start collecting benefits. Or whether or not you have reached full retirement age. Remember, benefits will be lowered if you start taking them before full retirement age. Benefits may also be adjusted if you continue to work after starting Social Security.

Are There Calculators To Estimate My Social Security Benefits?

Here is an example. If you were born in January 1960 or later, your full retirement age is 67. Choosing to take your Social Security at 62 would reduce your benefits by about 30%. Putting the maximum Social Security benefit closer to $2,710 per month. For a more personalized estimate of the benefits you could receive at various ages, visit the Social Security Administration website and use its calculator.

The site also allows you to estimate your benefits by answering a few simple questions and registering for a more thorough estimate based on your actual earnings history. Keep in mind this is just an estimate. Still, good to have an idea of what your Social Security income will look like.

Don’t forget that should you decide to take your benefits early; your cost of living adjustments will also be reduced. On the flip side, if you delay taking your benefits, your Social Security cost of living adjustments will rise. It may not seem like a really big deal, but over a 30-plus-year retirement, those pennies might really add up. Looking for ways to maximize your Social Security will be greatly appreciated by the 90-year-old you.

How far would your standard of living drop if you tried to only live on Social Security? Living in a big city like LA, you would be hard-pressed to get by even with two people receiving the maximum Social Security Benefit. Be proactive and work with a Fee-Only Fiduciary Financial Planner to help ensure you can maintain your standard of living in retirement.

Live for Today, Plan for a Richer Tomorrow. Your Social Security Benefits may depend on it.

Financial Planner David Rae help KTLA News avoid GoFundMe Fraud — LA Financial Advisor David Rae helps KTLA News Maximum Social Security Benefits NOW

DAVID RAE, CFP®, AIF® is a Los Angeles Fee-Only Certified Financial Planner with DRM Wealth Management. A regular contributor to Advocate Magazine, Forbes.com, and Investopedia not to mention numerous TV appearances. He helps friends of the LGBT community across the USA (now also in Palm Springs) get on track for their financial goals. For more information visit his website at www.davidraefp.com

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