By Philip Moeller
June 15, 2015

If Social Security had a lottery jackpot, it would go to the small number of persons who collect the absolutely highest retirement benefits allowed under agency rules.

How high are the hurdles to claiming the maximum amount? Pretty darn high. A worker needs to have wage earnings large enough to equal or exceed the agency’s annual ceiling on earnings subject to payroll taxes for at least 35 years.

The earnings ceiling this year is $118,500. And that number has nearly doubled in the past 20 years from $60,000 in 1995.

Social Security bases your benefits on your highest 35 years of earnings after adjusting each year’s earnings to reflect wage inflation. In other words, your top 35 years, as documented via your payroll stubs, may not be your top 35 once they’re adjusted for wage inflation. Still, you can be certain that if you’ve earned at or above the annual payroll-tax ceiling for at least 35 years—lucky you!—a benefits bonanza awaits.

The size of that benefit check will also depend on wage inflation. This year’s top monthly benefit at 66, or full retirement age (which is the benchmark the agency uses), is $2,663 ($31,956 a year). By contrast, the average Social Security payout is a more modest $1,287 ($15,444 a year).

If you wait until age 70 to claim, delayed retirement credits will boost your payment to $3,515 in today’s dollars ($42,182 a year). The actual amount you’d receive in four years also would include accumulated cost of living adjustments.

If you haven’t already done so, open an online Social Security account to access the agency’s record of your earnings each year. By comparing what you have earned each year to that year’s earnings ceiling, you can see how close you are to being eligible for the benefit jackpot. For the uber-geeky, Social Security provides each year’s top benefit and the average inflation-indexed wages used in its calculations.

Clearly, few workers qualify for the highest payout. While claiming ages are rising, fewer than 2% of all Social Security beneficiaries wait to file for benefits until age 70, when they reach their maximum level.

The maximum benefit payouts in future years will depend on how much wage inflation there has been. This will determine the new ceiling for earnings on which payroll taxes must be paid, which in turn will drive a new jackpot number.

Even so, we do know that the top benefit won’t change much next year. Rates of general inflation have been so low that some people think the annual cost-of-living adjustment for 2016 benefits will be very small or even zero. Of course, you may be comforted that this also means your benefit dollars are not being eroded by inflation.

And if you’ve earned enough money to qualify for the highest payout, odds are you’re not too worried anyway about missing out on a few more benefit dollars.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

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