Although many citizens in the United States do not know it, there is a dollar limit on the amount of dollars that can be earned in the Social Security check. When a senior applies for retirement, the Social Security Administration calculates what pension he or she is entitled to based on his or her years as a worker. Thus, not all retirees get the same amount of money. This is precisely because of what we mentioned earlier. Not all retirees have worked for the same amount of time and have not received the same salary. The amount of the Social Security check depends directly on the taxes you pay as a worker.
Therefore, the more taxes you pay, the more Social Security you receive. It is the fairest method to be able to give a bonus to all workers who earn a good salary and work for many years. As we have commented before, there is a maximum limit on Social Security and in this year 2022 it is $4,194. Next year this will increase due to the COLA, but currently that is the limit.
Well, if you want to get this maximum benefit of $4,194, the salary you will need is $147,000 per year. This is the taxable maximum, i.e., no further tax payments are paid above this figure. Since there are no more taxes, no more money can be added to the benefit. Thus, if you have an annual salary higher than this amount, you will not pay any extra tax. The Federal Government is thinking about changing this rule, but we do not yet know if that bill will end up working.
Other factors affecting Social Security
Working a full year is not enough to reach the highest Social Security benefit. In addition to having a high salary for a year, you have to keep it longer. Here are the factors that most affect your SSA benefit.
- Salary as a worker. The taxes you pay as a worker directly affect your pension. More taxes paid means more Social Security money as a senior.
- Years worked. Ideally, you should work 35 years before claiming your pension. Every year not worked below this figure means a drop in average SSA.
- Retirement age. Any retirement age is perfect to apply for a pension, but Social Security cuts 30% of your subsidy if you apply at age 62. Therefore, try to apply for your benefit at age 67 in order to get the highest benefit possible.
If you combine these three factors and maximize them, your Social Security pension will be the maximum $4,194 or very close.