Want the Maximum Social Security Benefit? This Important Change Is Worth Paying Attention To
Key Points
The wage base limit is the maximum amount of income subject to the Social Security payroll tax each year.
The wage base limit typically increases from year to year.
You will need to delay claiming benefits until age 70 to be eligible for the maximum benefit.
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More than 53.8 million Americans receive Social Security retirement benefits, and for many of them, it accounts for a sizable portion of their retirement income. That's why it makes sense that people would aim to receive the maximum benefit possible.
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If you have receiving the maximum benefit on your radar, there's one key Social Security change you need to be aware of. Not knowing this change can be the difference between hitting the mark and unknowingly falling short.
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The wage base limit has increased
Most Americans pay Social Security payroll taxes on their income, but not all income is subject to the tax. The maximum amount that is subject to the tax each year is called the "wage base limit." Beginning this year, the wage base limit has increased by $8,400 to $184,500. So if you earn $190,000 this year, $5,500 would be exempt from payroll tax.
This is notable if you're aiming to receive the maximum Social Security benefit because to do so, you must have earned the wage base limit in the 35 years that Social Security uses to calculate your benefit.
Earning at least the wage base limit in those years means you would've paid the maximum amount of Social Security payroll taxes in those years, thus making you deserving of the maximum benefit.
Prepare for the wage base limit to change annually
The wage base limit changes in most years, so if you're aiming for the maximum Social Security benefit, you'll need to keep up with the changes. Here are the past 10 wage base limits:
| Year | Wage Base Limit |
|---|---|
| 2025 | $176,100 |
| 2024 | $168,600 |
| 2023 | $160,200 |
| 2022 | $147,000 |
| 2021 | $142,800 |
| 2020 | $137,700 |
| 2019 | $132,900 |
| 2018 | $128,400 |
| 2017 | $127,200 |
| 2016 | $118,500 |
Data source: Social Security Administration.
Maximum benefit aside, the wage base limit is worth knowing for people in that earnings range because it affects how much they could potentially pay in taxes.
Don't forget the second step to receiving the maximum benefit
The second step to achieving the maximum Social Security monthly benefit is to delay benefits until you turn 70. That's because each month you delay claiming benefits past your full retirement age increases them by 2/3 of 1% monthly (8% annually) until you turn 70.
Anyone born in 1960 or later has a full retirement age of 67, so delaying benefits until 70 would result in around a 24% increase.
Meeting the income requirement while claiming before 70 would automatically disqualify you from the maximum benefit.
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