Understanding Social Security Benefits

Social Security benefits are designed to replace a portion of your income if you become disabled, retire, or in the event of your death, your family may qualify for survivor benefits. The amount of benefits you receive depends on your average indexed monthly earnings (AIME), which is based on your earnings over your working life.

The Social Security Administration (SSA) uses your highest-earning 35 years to calculate your benefits. If you haven’t worked for 35 years, the SSA will count years with $0 earnings to complete the 35-year period, which will lower your benefit amount.

What You Need to Earn to Maximize Your Social Security Benefits

To receive the maximum Social Security benefit at full retirement age (FRA), you need to earn at least the maximum taxable income for many years. This income is subject to Social Security payroll taxes. In 2025, the maximum taxable earnings limit is $160,200. This means that if you earn $160,200 or more in a year, you will have paid the maximum amount into Social Security, and your earnings will be fully taxed for that year.

• Social Security Tax Rate: You pay 6.2% of your income into Social Security on earnings up to the maximum taxable earnings amount. Your employer matches this amount, so the total Social Security tax is 12.4%.

If you consistently earn at or above the maximum taxable earnings limit for 35 years, you’ll be in the best position to receive the maximum possible Social Security benefit.

Maximum Social Security Benefit Amounts

The amount you can receive from Social Security depends on your full retirement age (FRA), which is based on the year you were born. Here’s a general idea of the maximum benefits you can receive in 2025:

• Full Retirement Age (FRA) Benefits: If you reach your FRA (which is age 67 for people born in 1960 or later), the maximum monthly benefit you could receive in 2025 is $3,774.
• Early Retirement: If you choose to retire early (at age 62), your monthly benefit will be reduced. In 2025, the maximum amount for early retirement is approximately $2,800.
• Delayed Retirement: If you delay your retirement beyond your FRA, you can increase your monthly benefit by up to 8% per year until you reach age 70. For delayed retirement, the maximum monthly benefit in 2025 could be as high as $4,800.

What if You Don’t Earn the Maximum?

If you earn less than the maximum taxable earnings or don’t work for 35 years, your Social Security benefits will be lower than the maximum. Social Security uses your AIME to calculate your benefit, and the formula is designed to replace a higher percentage of income for low earners than high earners. The more you earn (up to the maximum taxable earnings limit), the more you contribute, and the higher your benefits will be, up to the cap.