Social Security and You: Most People Can't Get the Maximum Benefit
If you read a recent USA Today article, you would have seen a story with this intriguing headline: "3 steps to claiming the $4,555 max monthly Social Security benefit." And if you are pushing retirement age, you would of course want to read that story and get yourself locked into a heaping serving from the Social Security gravy train.
In a nutshell, the story says this. To get a maximum Social Security benefit, you've got to do these three things: 1) work for 35 years; 2) earn the maximum Social Security taxable salary every year; and 3) wait until you are 70 to claim Social Security.
But that promise of maximum benefits was very misleading. I mean, think about it. Who is going to read an article headlined "3 steps to claiming the $4,555 max monthly Social Security benefit?" It is very likely going to be someone pushing Social Security age. In other words, someone in their late 50s or early 60s. Well, if you're already that age, there is absolutely nothing you can do to change step 2. (Most people earn far less than the Social Security maximum taxable base -- currently $160,200.) Obviously, you can't go back 35 years and change your earnings history.
Or to put that another way, unless you happen to be that relatively rare person who has earned the maximum Social Security wage for the past 35 years, the article is totally meaningless to you.
Or to put that yet another way, the article only works if it is read by someone in their early 30s who would say: "Oh, gosh, if I want to get the maximum Social Security benefit, I better earn the maximum Social Security salary for the next 35 years and then wait until 70 to claim benefits." And I will bet my next Social Security check that not very many people in their 30s are going to read any kind of article about Social Security.
So why did USA Today run such an article? I can just picture the editors of the newspaper sitting around saying something like this: "We know a high percentage of our readers are old folks. And what topic are old folks most interested in? Social Security of course. And what do they want from Social Security? More money. So, let's do a story about how they can get the maximum Social Security check."
But then they don't think that through and realize that there is absolutely nothing an average wage earner who is now pushing Social Security age can do to claim "the $4,555 max monthly Social Security benefit." Yet they run the story anyway and cause a whole lot of readers to rue the fact that they can't get a ticket on that Social Security gravy train!
And that newspaper story just reminds me of a point I've made many times in this column. So many senior citizens are absolutely obsessed with the notion that there is some secret to getting more money from Social Security that they don't know about.
So, assuming you are one of the many people who haven't earned the maximum Social Security wages for the past 35 years, is there anything you can do to maximize your benefits? Well, that gets us to Step 3 in the USA Today column. Supposedly, you should "wait until you are 70 to claim Social Security." But as I've also discussed many times in this column, that may be good advice for some, but not for everyone.
For example, if you're not in the best of health, or if you were simply born with the wrong genes as I was (my dad and almost all my uncles died before age 60), then why wait until 70 to claim benefits? Chances are you simply aren't going to live long enough to make up for the money you'd lose by not staring your benefits at your full retirement age, or even sooner.
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