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What is the maximum social security contribution for 2020?



Almost every American hopes to receive financial support from social security at some point in their lives. With a formula based on your average income over the course of your career, Social Security calculates how much you can get if you use your benefits at different ages. Since this formula takes into account a limited amount of earnings in their calculations, there is a theoretical maximum amount of social security benefits that recipients can receive monthly.

The maximum amount of social security benefits varies from year to year, based on factors such as inflation and income changes, which are taken into account for social security payroll taxes. The Social Security has just released the new peak performance for 2020, and the numbers are somewhat surprising as they vary according to the age at which you claim your benefits.

Let's look at how the maximum benefit is calculated and why there are so many differences.

  Three social security cards with a brass key above.

Source: Getty Images.

How to Get the Maximum Social Security Contribution

If you want to get the most out of Social Security, you need to have a very successful career. When calculating the maximum wage, the SSA assumes that an employee has earned the maximum annual salary since the age of 22, allowing him to take full advantage of work experience of 35 years or more.

The SSA calculates the maximum wage amounts for applicants in four different age groups: 62, 65, 66 and 70. Persons born in 1

954 and therefore 66 years old in 2020 will be fully retired on their 66th birthday, so this amount represents the basis for the performance calculation. Persons who retire earlier than 66 must receive a reduction in their monthly benefits, while those who retire at age 70 receive a monthly increase in their benefits.

Here are the figures for people who will retire in 2020 compared to those in recent years.

Year retirement

Maximum at age 62

Maximum at age 65

Maximum at age 70

2017

$ 2,153

$ 2,542

$ 2,687

$ 3,538

2018

$ 2,158

$ 2,589

$ 2,788

$ 3,698

2019-19659016] $ 2,209 [2.7659 [2.7659] 19659020] 2020

$ 2,265

2.857 USD

3.011 USD

3.790 USD

Data source: SSA. Numbers are the actual monthly payments in the specified annuity year.

The most interesting thing about this graph is that the numbers for people of different ages do not increase by similar amounts every year. For example, for those who retire at the age of 62, the increase of 2018 was quite small, but since then the increases have been greater. However, for those retiring at the age of 70, the 2018 increase was greater than the 2019 and 2020 increases. The maximum age of 66 years will increase by $ 150 in 2020, while the maximum age of 70 will only increase by $ 20.

There are several reasons for these differences:

  • The age of full retirement is currently rising from 66 to 67, and because it is the year of your birth, the younger applicants in the table have a higher full retirement age than the older applicants.
  • The wage bases that people of different ages have experienced during their careers are different and give an advantage to some over others.
  • Differences in formula bending points for people of different ages can also lead to different amounts of benefits.

Get as much as possible.

The other curiosity is that some older recipients have claimed this. In previous years, the maximum amounts for new retirees are expected to be exceeded next year. Those earning maximum benefits at the age of 70 in 2018 and 2019 and qualifying for maximum benefits during those years will receive $ 3,862 and $ 3,830 per month in 2020, respectively.

Few people receive the maximum amount of social security because they would have an extremely high income throughout their careers. The best thing you can do to maximize the size of your social security check is to work at least 35 years and wait as long as possible before applying for your retirement pension. The more money you earn, the closer you are to social security.


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