The difference between claiming early and waiting could be thousands of dollars per month.
One of the biggest decisions you’ll make in retirement planning is what age to claim Social Security. Few factors can have as big an impact on your retirement budget and how you withdraw from your savings as when you stop working and when you start collecting Social Security.
That impact is magnified even more for high earners, who may be in line to collect the maximum possible benefit for their age. The difference between starting Social Security as soon as possible at age 62 and waiting until your 70th birthday can be thousands of dollars per month.
Here’s what everyone needs to know about the maximum possible benefit at every age from 62 through 70.
Image source: Getty Images.
Why is age such an important factor for Social Security?
Most people know that the age you claim your benefits will have a big impact on how much you receive each month. That’s because the size of your monthly payment revolves around your full retirement age.
Your full retirement age depends on when you were born. Those born in 1954 or earlier reached full retirement at age 66. But the age increases by two months for each year you were born beyond 1954 until reaching age 67 for anyone born in 1960 or later.
Early Social Security applicants receive a reduction of between 5% and 6.67% for each year they claim benefits before reaching full retirement. Delaying beyond full retirement age increases your benefit by 8% per year up until you reach age 70. All things being equal, someone who waits to claim Social Security until age 70 could receive about 77% more per month than they would if they started Social Security at age 62.
But age has another important role in determining your Social Security benefit that many can ignore. Working in your 60s can significantly affect your primary insurance amount, which is used to calculate your monthly benefit. The primary insurance amount, or PIA, is based on your average inflation-adjusted earnings. The Social Security Administration determines that number by adjusting every year of earnings to an inflation index based on the year you turn 60. However, any of your earnings after that year don’t get an inflation adjustment at all.
That might sound like earnings in your 60s aren’t worth as much. But most people who continue working in their 60s are out-earning themselves from their 20s even after adjusting for inflation. What’s more, the annual cap on earnings that count toward Social Security also outpaces inflation. That means if you’re earning the maximum possible to count toward Social Security, you’ll see your potential monthly benefit increase substantially by continuing to work in your 60s.
How much do you have to earn to max out Social Security?
Every year, the Social Security Administration increases the amount of wages subject to Social Security taxes. Any amount of wages earned over that level doesn’t incur the 12.4% payroll tax (split between the employer and employee), but they also don’t count toward your earnings history.
Continued earnings in your 60s at or above the maximum taxable earnings will increase your primary insurance amount. As a result, those who work longer in high-paying careers receive much more from Social Security than those who retire early.
Here’s the maximum taxable earnings for each of the last 40 years.
| Year | Earnings | Year | Earnings |
|---|---|---|---|
| 1987 | $43,800 | 2007 | $97,500 |
| 1988 | $45,000 | 2008 | $102,000 |
| 1989 | $48,000 | 2009 | $106,800 |
| 1990 | $51,300 | 2010 | $106,800 |
| 1991 | $53,400 | 2011 | $106,800 |
| 1992 | $55,500 | 2012 | $110,100 |
| 1993 | $57,600 | 2013 | $113,700 |
| 1994 | $60,600 | 2014 | $117,000 |
| 1995 | $61,200 | 2015 | $118,500 |
| 1996 | $62,700 | 2016 | $118,500 |
| 1997 | $65,400 | 2017 | $127,200 |
| 1998 | $68,400 | 2018 | $128,400 |
| 1999 | $72,600 | 2019 | $132,900 |
| 2000 | $76,200 | 2020 | $137,700 |
| 2001 | $80,400 | 2021 | $142,800 |
| 2002 | $84,900 | 2022 | $147,000 |
| 2003 | $87,000 | 2023 | $160,200 |
| 2004 | $87,900 | 2024 | $168,600 |
| 2005 | $90,000 | 2025 | $176,100 |
| 2006 | $94,200 | 2026 | $184,500 |
Data source: Social Security Administration.
To receive the maximum possible benefit for your age, you’ll need to earn at least the amounts listed above through 2025.
The maximum possible benefit for ages 62 through 70
Those who consistently work right up until they claim Social Security can receive a substantial monthly benefit. But the amount varies drastically between ages 62 and 70.
The Social Security Administration publishes maximum benefits for ages 62, 65, 66, 67, and 70 every year, and updates previous years using the annual COLA. I calculated the theoretical maximum possible benefit for each age group based on their average indexed monthly earnings, assuming they continued earning the taxable maximum through 2025.
The table below shows the maximum possible Social Security benefit for each age group, according to my calculations.
| Age You’ll Turn in 2026 | Maximum Possible Social Security Benefit |
|---|---|
| 62 | $2,969* |
| 63 | $3,105 |
| 64 | $3,257 |
| 65 | $3,467 |
| 66 | $3,752 |
| 67 | $4,207 |
| 68 | $4,506 |
| 69 | $4,813 |
| 70 | $5,181 |
Data source: Calculations by author. *Claim at 62 and 1 month.
As you can see, someone who works through their 60s to claim Social Security at age 70 could be in line for over $5,000 per month. Someone who claims as early as possible will receive less than $3,000 per month despite earning similar amounts throughout their career. That difference could have a meaningful impact on their retirement budgets. Hopefully, however, someone with that level of income is also saving and investing for retirement, so they’re not entirely reliant on Social Security benefits to fund their golden years.