You could be able to receive $3,895 per monthly in Social Security income in 2021 if you retire and are eligible for Social Security's maximum benefits. This amount will only be available if you start receiving benefits at age 70 or older. If you file before age 62, the maximum amount you can receive this year is $2,324, while the maximum you get if filed after age 66 is $3.113Social Security's formula can be complicated and you will not get the maximum benefits if your work history is too long. This is how Social Security calculates maximum benefits. What can you do to ensure the highest payout?How Social Security calculates benefitsSocial security benefits are determined by how long you have worked, how much money you earn over your career and when you start receiving benefits.Although you can begin receiving benefits as early as age 62 you will not receive 100% of the benefit amount if Social Security is claimed at full retirement age. This means that you must claim Social Security between 66 and 67 for those born after 1943. Your benefit amount will be reduced if you claim before full retirement age. Your benefit amount will be reduced if you claim after full retirement age.Social Security adjusts your annual income to account for inflation. Then, it calculates your average monthly earnings based on your 35 highest earning years. Zeros are added to the formula if you don't have 35 year's income. This reduces your benefit and ensures that you don't get the maximum amount.After Social Security calculates your monthly income, it lowers that amount at certain income levels known as bend points. This is how you will determine your primary insurance amount or the benefit you'll get if you file at full retirement age.Your primary insurance amount will be reduced if you claim before full retirement age. It's reduced by five-ninths to 1% per month for the first 36 month and five-twelfths to 1% for each additional month. Delaying claiming benefits until full retirement age can result in your benefit being increased by two-thirds to 1%. The maximum benefit payable will depend on your age when you file for Social Security.How to Maximize Your Social SecuritySocial security's formula makes it difficult to qualify for the maximum benefits. You will need to have a minimum of 35 years experience in work. In addition, you must have earned income that is at least the annual taxable limit for all those years. This is a difficult task considering the average American worker earns about $51,000 annually. However, the maximum taxable Social Security limit is $142,800 in 2021.There are still strategies that you can employ to maximize your benefits, even if you do not qualify for the maximum Social Security benefit.Working at least 35 years can eliminate zeros from your average monthly income calculation. Delaying retirement could allow you to replace lower earning years in the beginning of your career by higher earning years later in your life. This will increase your benefits.To receive increases in delayed retirement credits, you can wait until age 70 before receiving benefits. There is a significant difference in claiming benefits at 62 and 70. If your full retirement date is 67, and your total retirement benefit is $1,000 (or $700 per month if you claim before age 62), then 70% of your full retirement benefits would be available to you. If you wait until 70 to claim, you will receive 124% of the full retirement benefit amount or $1,240 each month. This is 77% more than what you would receive at age 62.One last thoughtIt can be difficult to qualify for the maximum Social Security benefits. This could mean that the amount you are entitled to might not meet your retirement goals. This is what you need to know: In 2021, the average retiree will receive $1,554 annually in Social Security benefits. That's $18,644 per annum. This is not much, but it won't allow you to live a luxurious lifestyle. Therefore, it's important to plan for Social Security.
