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Maximum Social Security Income for 2018

I was looking through the social security income tables for 2018 and came across the table for Workers with Maximum-Taxable Earnings. This is the table for those who earn the maximum allowable social security earnings for 35 years. The numbers were impressive, so let’s review them here.

That’s nearly $3,700 from age 70 until you die. Tax-free. Inflation adjusted. Really? That’s fucking amazing.

You can use the social security quick-calculator to figure out your own benefits. It’s pretty easy to figure out once you play around with it.

The social security website has a more detailed calculator as well where you’d enter each year’s income.

To give you a sense this social security income concept, I paid $7,400 in 2015 in social security income taxes. And if I were to continue working then I’d probably pay around $260k over my career lifespan.

 

$3,700/month of Social Security Income

Below are the current sample retirement ages and what you could expect to earn from social security income if you fully maxed out your earnings. Which most medical professionals will achieve.

Age 62 – $2,158/month or $25,896/year.

Age 65 – $2,589/month or $31,068/year.

Age 66 – $2,788/month or $33,456/year.

Age 70 – $3,698/month or $44,376/year.

So I could earn $44k a year for 30 years. That’s a total of $1.3M which is far less than the $260k I would have paid into the social security system. If my math is wrong please point it out in the comment section below.

Maybe I don’t need a retirement account in order to successfully retire, after all.

Benefits Based on Earnings

Our future social security income is based off of our earnings history.

The second factor is at what age we decide to receive our social security income.

35 years is the magic number.

SS will take your 35 highest income years and use that to calculate your retirement benefits. For any years when you didn’t earn an income, a $0 will be used as part of the calculation.

It doesn’t matter if you earn $10M/year or $130k/year. The maximum SS income is calculated off of $128k for 2018 and it’s adjusted according to inflation for all other years.

 

35 Years of Income

It’s not hard to piece together 35 years of income for a medical professional.

We generally start earning an income in residency which doesn’t meet the maximum levels of income but it still counts.

A medical professional could drop down to part-time or per diem and very easily earn the current maximum income range of $128k for 35 years.

In return for this hard work, they could retire at age 70 and collect a very healthy $45k/year which wouldn’t be taxable income as long as no other income is earned.

I highly recommend reading the book Social Security Made Simple by Mike Piper. It’s the only book I’ve ever needed for understanding social security and it’s very easy to read and understand.

 

US Social Security Income

The average US retiree received $1,400/month of social security income. And, as I mentioned, the maximum for 2018 is $3,700/month.

There isn’t a social security fund – no stash of cash sitting around from which disbursements are made.

Those who are still working pay social security taxes on their income which goes to fund the social security program for our retirees.

This concept appeals to me. Makes me feel that I’m helping others. That my productivity is benefiting those who worked their asses off before me.

 

Determining Insured Status

Not every worker in the US will become insured by social security. There are certain requirements which must be met in order to quality for this social security income.

The social security office uses a credit system which they call a QC or quarter of coverage. You get 4 of these work-credits for every year that you work and earn a minimum income.

You need a minimum of 6 QC’s to qualify for social security income and you can earn a maximum of 40 QC’s.

You must earn $1,320 in 2018 dollars to receive 1 QC. So, not a lot.

So if you earn $5,280 in a given year then you get 4 QC’s which is maximum number of QC’s for a given year.

 

Supplemental Social Security (SSi) Income

This gets overlooked and you might be familiar with the term SSI. SSI is supplemental social security income which pays social security income to those who are disabled and <65 or those over age 65 with inadequate QC’s (work credits) and <$2,000 in assets.

For 2018 the maximum social security income (SSI) is $750/month. And only 8.2M Americans are getting SSI in 2018.

This is the federal amount and some states will add their own dollars so it might be a touch higher. In California (pdf) it’s at around $910/month for a single individual above age 65.

 

SSI versus SSDI

From above you can see that there is a slight difference between SSI and SSDI. The social security office doesn’t care but it should matter to us income earners.

If I file for disability and I am <65 then I would get my money through the SSDI route – social security disability income.

If I am over age 65 without a disability, I would get SSI. It is income I would get if I didn’t work enough, didn’t earn enough, and didn’t have enough assets.

8.2M Americans get SSI/SSDI in 2018.

Of these, 2.2M are >65, meaning that they are getting SSI due to inadequate savings.

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