Social Security pays some seniors over $50,000 a year. Here’s why you probably won’t be one of them


Jhere are different factors that combine to determine how much money Social Security pays you on a monthly basis. These include how many years you work, how much you earn each year, and the age at which you decide to register for Social Security.

This year, the maximum Social Security benefit is $4,194 per month. On an annual basis, that’s an income of $50,328, which is actually quite generous.

But most older people end up getting much less Social Security. And here’s why it probably will be for you.

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The maximum monthly benefit is really hard to get

To claim the maximum monthly Social Security benefit, you must do the following:

  • Work at least 35 years.
  • Earn enough for 35 years to meet or exceed the annual salary cap.
  • Defer your application for Social Security until age 70.

Now, the first and last points may not be so difficult to reach. Many people manage to work past 35, and many intentionally delay retirement so they can wait until age 70 to apply for Social Security.

It’s the midpoint that’s a bit more difficult, as it depends on being high income. Each year, a salary cap is put in place to determine the amount of income subject to social security contributions. This year, that cap is $147,000 and it will likely increase in 2023.

Hooking up the maximum Social Security benefit requires you to earn the equivalent of the salary cap or more for a period of 35 years. And it’s not necessarily something you can control. If you’re a teacher, for example, you’re probably not in a position to earn a salary of $147,000 (at least not in many school districts) no matter how willing you are to work.

Also, while some people struggle with working 35 or postponing Social Security until 70, it’s not possible for everyone. And that’s why the average monthly Social Security benefit is well below the $4,194 per month maximum that seniors can collect.

Lower benefits shouldn’t be a problem

While some seniors may be in line for an annual income of over $50,000 from Social Security, you don’t have to worry if that’s not what you envision. That’s because there are steps you can take to make up for the drop in benefits.

For one, you can build up a decent sized nest egg. If you manage to collect $1 million in savings and you decide to withdraw from your balance at a rate of 4% per year, which experts have long recommended, you will have an additional $40,000 available to you each year. Even if Social Security only pays you $20,000 a year in benefits, that’s still an annual income of $60,000.

You can also work part-time in retirement if your health condition allows it. Jobs have become more and more flexible in recent years, you may find that holding a part-time position isn’t that painful and it allows you to top up your benefits well.

In total, most seniors collect no more than $50,000 from Social Security in a year. So if you don’t fall into this category, rest assured that you are in good company and your retirement is by no means doomed.

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