Here is the maximum social security benefit in 2019 – The Motley Fool

Social Security has announced changes for 2019, including an increase in the maximum amount of social security benefit payable to beneficiaries who will retire next year. By 2018, new retirees could pocket up to $ 3,698 per month, but in 2019 they will be able to collect up to $ 3,770 per month.

However, your chances of qualifying so much for social security are rather slim. Read on to find out more about the maximum you can collect during Social Security at different ages next year and what steps you can take to maximize your benefits.

How does social security work?

To qualify for social security, you must accumulate 40 work credits, which corresponds to about 10 years of work. Once you have accumulated the credits you need, you can start receiving benefits as early as age 62 or wait until the age of 70. However, you will only receive 100% of the amount of your benefits if you apply at the retirement age. . If you claim earlier than this, your benefit check will be reduced, but if you claim later, you will receive a bonus equal to 8% per year that you delay.

SOURCE OF IMAGE: GETTY IMAGES.

Social Security uses a complex calculation to determine the amount of benefits you will receive at retirement age, but the program is designed to replace about 40% of your pre-retirement income.

The calculation begins with adjusting your 35 most inflation-compensated years of employment to get your average monthly indexed pay (AIME). Next, Social Security reduces your AIME to certain income levels, called "curvature points", to determine the amount of your primary insurance. This is the amount you can receive if you claim at the retirement age.

If you make an early claim, your principal insurance amount will be reduced by five ninths of 1% per month during the first 36 months of your advance claim and by five twelfths of 1% for each additional month you claim earlier. . If you wait to apply after the retirement age, you will get deferred retirement credits that will increase your two-thirds payment by 1% for each month late, up to age 70.

The maximum amount payable in 2019

The good news is that the maximum amount payable to new retirees will increase next year, but the bad news is that to qualify for this maximum payment, you must have earned income during your career equal to or above the taxable limit. annual, which was $ 128,400 in 2018 and $ 132,900 in 2019.

If you qualify for the maximum benefit possible, you will receive $ 2,209 per month if you retire at age 62 or $ 3,770 per month if you retire at age 70. The following table shows the evolution of the maximum payments in 2019 from 2018 to 62, 65 and 70.

Data source: Social Security Administration. Table by author. Figures for 2018 are based on levels determined by Social Security at the end of 2017.

How to get the most money out of Social Security

Social security is meant to supplement a retiree's income, but as many Americans have limited retirement savings, it is often a major source of retirement income. For this reason, making the most of social security is important.

It would be nice to get the maximum amount paid by Social Security, but the chart below shows that most Americans end up getting between $ 700 and $ 1,800 a month.

Data source: Social Security Administration. Graphic by author.

If you want to receive the largest monthly social security check possible, you will need to maximize your earnings while you work so that your AIME is as high as possible. Then you can defer benefit payments until age 70 to benefit from deferred retirement credits.

For example, suppose Rick has reached retirement age at age 67 and is entitled to a full retirement benefit of $ 1,000. If Rick claims at the age of 62, he would receive only 70% of his retirement benefits, or $ 700 a month. However, when he retires at age 70, he would receive 124% of his benefits due to delayed retirement credits of $ 1,240 per month. The payment of $ 1,240 would be 77% higher than his 62 year old benefit.

Otherwise, if your goal is to collect as many benefits as possible during your life, you must consider your health. If longevity runs in your family, waiting until you are 70 years old to apply for compensation can generate the maximum benefit over the life of Social Security if you live a long time. However, if you are in poor health, it may be wise to claim earlier. As you can see in the following table, the lifetime benefits that a person can collect if she claims at age 70 will not overshadow the lifetime benefits associated with the claims at age 67 until that age. that the person is at least 80 years old.

Data source: Social Security Administration. Graphic by author.

If you have not worked the maximum of 35 years used by Social Security to calculate benefits or if you have accumulated many years of low income, you can continue working later in life.

When you have less than 35 years of work experience, Social Security uses zeros in its calculation to determine average monthly benefits. Replacing these zeros on your record can give a boost to your primary insurance amount. Similarly, if you earn more now than in the past, continuing to work to replace the lower-income years of your worksheet can also increase your benefits.

This strategy can be used even if you collect social security contributions because it recalculates the amount of your primary insurance to reflect changes to your work record each year. However, if you are younger than the retirement age, working and contributing to Social Security, a portion of your benefits may be withheld until you reach the age of retirement. Retirement age if you earn more than $ 17,640 next year because of the Social Security earnings criterion.

The strategies above could help you achieve financial security in retirement.