Social Security was never meant to make up the entirety of anyone’s retirement income. The fact is, however, some people are collecting surprisingly big checks. This year’s maximum-possible monthly payment is $5,108, or $61,296 per year. That’s almost as much as the median salary U.S. workers are currently taking home, according to data from the Bureau of Labor Statistics.

How did they do it, and what will it take for you to do it as well? Here’s how to get the very most you can out of the government-managed entitlement program.

Image source: Getty Images.

1. A minimum of 35 years’ worth of work-based taxable income

There are three components to your future Social Security benefits. One of them the sheer number of years you earned taxable income as an employee. You’ll need to work for at least 35 years to maximize your payments.

See, when calculating your monthly benefit, the Social Security Administration looks at your inflation-adjusted income in your 35 highest-earning years. You don’t have to work a full 35 years to claim benefits, to be clear. It’s just that for any year less than 35 that you don’t earn any reported income, the program fills in those blanks with a value of $0, dragging down your annual average.

Conversely, working more than 35 years won’t necessarily help, since you only get credit for your best 35. There may still be an upside to working more than 35 years though. If you didn’t earn a great deal of money in some of them but are making good money now, you’ll be replacing some of those lower-earning years with higher-earning ones, raising your overall average of your top 35.

2. Strong earnings for at least 35 of those years

It’s not just a matter of making good money for a minimum of 35 years though. You must earn well above average earnings for that length of time, reaching or eclipsing Social Security’s taxable income threshold in each of those.

And these thresholds are pretty high. This year, for instance, the program doesn’t stop increasing your FICA tax liability until you reach earnings of $176,100. Here’s the minimum amount of taxable wages you would have needed to earn each and every year going all the way back to 1986 to max out your future benefits payments.

To be clear, although you pay into Social Security’s pool of funds via taxes on wages up to these amounts, you don’t pay additional FICA taxes above and beyond these amounts (although you do pay ever-rising income tax the more money you make, since tax rates rise the more you earn). The program stops taxing you beyond these levels because it wouldn’t offer you any additional benefit in return. Again, the absolute ceiling is $5,108 per month.

3. Waiting until you turn 70 to claim benefits

Finally, although you can initiate your Social Security retirement benefits as soon as you turn 62, doing so would dramatically reduce the size of your check by as much as 30% of your intended benefit at their full retirement age, depending on when you were born. Even claiming benefits at your official full retirement age, however, still wouldn’t get you to the maximum-possible benefit. To secure the maximum amount of $5,108, you must until you reach the age of 70 to begin your Social Security payments. That will improve the size of most people’s payments by 24% (if not more) above their payment if claiming at their full retirement age.

Just know that there’s no point in waiting any longer than this to file, since Social Security stops adding credit for delaying your benefits beyond the age of 70. In fact, there’s good reason to claim pretty soon after you reach this point. The Social Security Administration will back pay you some of what it owes you if you don’t file right away. But it will only give you a maximum of six months’ worth of back pay, no matter how long after you turn 70 you claim your retirement benefits.

Prioritize what you can control

You know there’s no way you’re going to qualify for this amount? That’s OK. Most people don’t. Fewer than 20% of recipients see monthly checks of more than $3,000, in fact.

Don’t let that discourage you though. Even modest wage-earners can put themselves in a far better financial situation with their own savings than they’d ever be able to achieve with Social Security. Most calculations of Social Security contributions’ effective rate of return only put the figure in the mid-single-digits, versus the stock market’s average annual gain of around 10%.

Besides, Social Security was never meant to be anyone’s sole source of retirement income anyway. Do what you reasonably can to max it out, but mostly stay focused on maximizing the growth of your own personal retirement nest egg.

Inflation is the sort of thing that tends to creep up on people — at least most of the time. In recent years, it’s been in everyone’s face — and has made it very difficult for working Americans and retirees alike to keep up with their bills.

Thankfully, Social Security benefits, which many retirees rely on, are protected from inflation to some degree. That’s because those benefits are eligible for an annual cost-of-living adjustment, or COLA.

Image source: Getty Images.

But data from The Senior Citizens League, an advocacy group, highlights what a poor job those COLAs have done through the years. Between 2010 and 2024, seniors on Social Security lost 20% of their buying power due to COLAs failing to actually keep up with rising costs as they relate to retirees.

It’s for this reason that advocates are pushing for changes to the way Social Security COLAs are calculated. But even if those changes come to be, it doesn’t mean that retiring on Social Security alone will be a good idea.

A more targeted measure

The current index Social Security COLAs are based on is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The problem is that the CPI-W does not do a good job of capturing the costs retirees face.

Put another way, the spending patterns of seniors on Social Security are apt to differ from those of people who are still working. And also, it’s not a given that Social Security recipients live in urban areas, and the CPI-W specifically focuses on urban wage earners. So all told, there’s a huge disconnect.

That’s why advocates have been pushing to base Social Security COLAs on the Consumer Price Index for the Elderly instead. That index would likely place more weight on spending categories like healthcare that are a huge expense for seniors in particular. If lawmakers agree to this change, it could result in more generous COLAs in future years.

Social Security won’t be enough, even with better COLAs

Larger COLAs could be a boon to retirees on Social Security. But even if lawmakers implement this change, it won’t suddenly make it a good idea to retire on Social Security alone.

The reality is that if you earn an average wage, Social Security will probably replace about 40% of it, assuming that benefit cuts don’t happen. But most retirees can’t live very well on a 60% pay cut. So even if changes occur that lead to more generous COLAs, it’s still important to have adequate savings so you can supplement your monthly Social Security checks.

To that end, aim to start funding an IRA or 401(k) plan as early on in your career as you can, and invest that money so it’s able to grow. If you’re not sure what investments to choose, you can consult a financial advisor.

If you’re not interested in hiring a financial advisor, you can always fall back on an S&P 500 index fund. This effectively allows you to invest your retirement savings in the broad stock market. It’s a great way to take the guesswork out of investing while making sure your portfolio is diversified.

A new, senior-specific formula for calculating Social Security COLAs could be a very good thing for retirees and lead to yearly raises that actually allow recipients to keep up with inflation. But that won’t change the fact that those benefits were never designed to replace workers’ paychecks in full. And you shouldn’t make the mistake of thinking you’ll be just fine on Social Security alone in retirement when in reality, that’s likely to lead to a world of financial stress and heartache.

You’ll make many decisions when preparing for retirement. Choosing when to file for Social Security benefits is one of the most important of those choices.

You have a long period when you could file for benefits, as you can claim as early as 62, but can also wait and increase the amount of your benefits until age 70. Picking the right moment within that eight-year timespan helps you maximize your income and build a more secure retirement.

For many people, an early claim seems like the obvious answer since you can start collecting right away and enjoying the benefits you’ve worked hard to earn all your life. In reality, though, claiming at a young age — and especially before your designated full retirement age — could be something you end up really regretting.

Here’s why.

Image source: Getty Images.

An early claim limits your ability to work

If you start receiving Social Security before your designated full retirement age (FRA), your decision could impact your ability to work because when you earn too much before FRA, your benefit checks are reduced or even eliminated.

For example, in 2025, if you won’t reach FRA during the entire year, then once you earn more than $23,400, you’ll lose $1 in benefits for every $2 earned above that limit. This could quickly lead to your Social Security checks disappearing entirely, since the Social Security Administration withholds full checks when you go above the limit.

This rule prevents double-dipping of benefits and a paycheck in the years before you reach FRA, and it can lead to a lot of hassle if you’re trying to track earnings to avoid losing benefits.

Eventually, you do get credit if checks are withheld, as your benefit is recalculated at your full retirement age to account for the missed money — but the process of slowly recovering the benefits you missed out on due to exceeding the work limits can be very frustrating.

You’ll take a big benefits cut that is permanent

Since you have an eight-year window to claim Social Security, there are rules in place to try to equalize out lifetime benefits so you get the same amount of money no matter when you claim.

One of those rules is that if you claim Social Security benefits before FRA, benefits are reduced by early filing penalties. But if you wait until after FRA, benefits are increased due to delayed retirement credits.

The penalties and credits apply monthly, as you’ll lose 5/9 of 1% of your standard benefit for each of the first 36 months you receive a check ahead of your FRA. If you claim even sooner, you lose an additional 5/12 of 1% for any of the prior months.

The monthly penalties add up to an annual 6.7% reduction from your standard benefit for years one, two, and three. For years four and five when you were collecting early Social Security benefits, the reduction in benefits is 5% annually. This means that a claim at 62 instead of at an FRA of 67 results in a 30% cut to benefits overall. That cut is permanent, and benefits will always be 30% smaller than they would have been had you waited to claim.

If you delayed beyond FRA until 70 instead, though, you’d have increased your benefits by 2/3 of 1% or 8% per year and received more benefits instead of smaller checks.

You’ll shrink your survivor benefits

You are not the only one who could regret your early Social Security claim. Your spouse could as well. When you die, your spouse either gets to keep receiving their own benefit or keep receiving yours. If you were the higher earner in your family and your Social Security benefit is a lot bigger, then keeping your benefit would be better for your surviving spouse.

The problem is, if you claimed Social Security ahead of schedule, you’d have shrunk your benefit — so your surviving spouse would be left with a smaller survivor benefit than they could have had. Since living on a single Social Security check instead of two is hard, your spouse could end up really wishing you hadn’t claimed early.

You stand a good chance of missing out on lifetime income

Finally, research has shown that around 7 in 10 retirees would find themselves with more lifetime income if they delay benefits until 70 instead of claiming at a younger age. If your goal is to maximize the lifetime income Social Security offers so you don’t have to rely as much on your 401(k) or other retirement plans, then you’ll want to avoid shrinking your lifetime income.

That’s especially true as Social Security is a reliable source of funds since there are cost-of-living adjustments built in that help you avoid losing buying power due to inflation.

Ultimately, an early claim is simply not the right option for many. When you are making your retirement plans, think seriously about whether you should prepare to try to put off your Social Security claim. If so, have a plan to do that, such as living on retirement savings until the day comes when you can claim a large benefit and set yourself and your spouse up for a more secure future.

October is shaping up to be a pretty big month for Social Security beneficiaries. You’ll get your first look at what your checks will look like next year with the cost-of-living adjustment (COLA) announcement on Oct. 15. If you’d been receiving paper checks in September, you’ll also receive your first electronic payment in the coming weeks.

There’s also a chance that you could get more than one benefit check this month. More than 2.5 million beneficiaries are set to receive three checks in October, and some married couples could receive as many as six next month.

Image source: Getty Images.

How the Social Security payment schedule works

Paying Social Security benefits to millions of Americans each month is no easy feat. The government manages this by assigning specific payment dates based on the day of the month you were born. It goes like this:

• Born between the 1st and the 10th: Second Wednesday of every month
• Born between the 11th and the 20th: Third Wednesday of every month
• Born between the 21st and the 31st: Fourth Wednesday of every month

In October, this corresponds to the 8th, 15th, and 22nd. This is when you’ll receive your regular monthly check, whether that’s a retirement benefit, a spousal benefit, a survivor benefit, or a disability benefit.

The rules are different for those who qualify for Supplemental Security Income (SSI), though. SSI is a separate benefit available to the blind and disabled, as well as low-income seniors. If you qualify for SSI and Social Security, you’ll receive your Social Security payment on the third day of each month, regardless of your birthday, or the last preceding business day if the third is a weekend or holiday.

SSI payments are typically sent on the first day of each month, unless that day falls on a weekend or a holiday. Then, it’s sent on the last business day before the first.

Why 2.5 million Americans will get three checks in October

Seniors on Social Security and SSI will get their October payments as scheduled on the first and third of the month. They’ll also get their November SSI payment on Oct. 31 because Nov. 1, 2025, falls on a Saturday.

This means that some seniors will receive three benefit checks in October, and married couples could get up to six checks if both spouses are claiming Social Security benefits and SSI.

But it’s important to remember that that third check isn’t a bonus. It’s just you getting your November SSI payment a little bit early. You won’t receive an SSI payment again until Dec. 1, 2025, so you’ll need to stretch your benefits until then.

If you don’t receive your checks as scheduled, the Social Security Administration requests that you allow three additional mailing days before contacting it about the payment. However, most electronic payments, like direct deposit or prepaid debit cards, show up in your account pretty quickly.

Those who recently switched from paper checks to electronic payments will want to take special care to make sure their October payments show up as scheduled. If not, reach out to the Social Security Administration as soon as possible after allowing for the three mailing days to see what’s going on. It’s possible that something went wrong when you elected a new payment method. In that case, you might not get checks again until you’ve sorted this issue out.

After you’ve confirmed that you’re getting your checks as scheduled, you can relax a bit and look forward to your checks coming in on or around their assigned days in November.

For many retirees, claiming Social Security at 70 will be the best option to maximize lifetime benefits. However, that is not the case for all seniors. In fact, there’s one particular group that will absolutely regret claiming Social Security benefits late if they had the option to do so earlier. Here’s why.

Image source: Getty Images.

These retirees should not delay Social Security benefits until 70

Social Security retirement benefits become available once you are 62. For many people, though, putting off a benefits claim until 70 has a big payoff. A delayed benefits claim results in a monthly payment that is higher than their standard Social Security check.

Ending up with more lifetime benefits is also likely if you delay until 70. That’s because people now live longer than they did when Social Security was created, so retirees have a better chance of collecting their higher benefit for long enough to do more than just break even for years of waiting for payments during the delay.

However, it only makes sense to delay until 70 if doing so increases your monthly Social Security check. Otherwise, you’d be giving up money for nothing.

For people who are collecting Social Security retirement benefits on their own work record, benefits do increase until 70, because once you have passed your full retirement age, you can earn delayed retirement credits until that time. These increase benefits by two-thirds of 1% per month after FRA.

Certain Social Security recipients can’t do that, though. If you are receiving Social Security spousal benefits, your benefit maxes out at 50% of your spouse’s primary benefit. It doesn’t matter if you wait beyond FRA and delay your checks until 70. You won’t be able to make your benefit bigger by doing so.

Now, you can increase spousal benefits by waiting until reaching your FRA to start getting checks, instead of just claiming at your earliest eligible age. But, once you’ve hit your FRA, there’s no more money being added to your monthly check due to the delay.

Don’t delay your spousal benefits claim unless you have to

Since you don’t increase your Social Security check by waiting beyond FRA to get spousal benefits, there’s no reason not to claim these benefits as soon as you hit your full retirement age. You can claim at FRA and start using these benefits to supplement your income so you can take less out of your retirement plans.

However, there is one situation when you may have to wait: You cannot claim spousal benefits until your spouse has claimed their own retirement benefits.

So if you are claiming on your spouse’s work record and you are older than them and hit your FRA first, you still have to wait for them to claim their retirement benefits before you can start those spousal checks coming in.

Say, for example, you reach your FRA when your spouse is just 62 because they are younger. If they want to wait until 70 to max out their own retirement benefits, you’d be stuck waiting a full eight years longer to get your spousal benefits to begin.

Since Social Security benefits are protected against inflation and guaranteed to last for life, you and your spouse will need to carefully coordinate to decide which claiming age makes sense for each of you, given how these rules work.

Your higher-earning spouse still may want to wait until 70 to claim, even if that means you have to delay getting spousal benefits for longer, because doing so maxes out the bigger benefit, plus makes survivor benefits bigger.

There’s a lot to think about when making these claiming choices, so be sure you understand how your decisions will affect each other’s benefits and your chances, as a couple, of getting the most lifetime income from Social Security to make the most of this important benefits program.

The Federal Reserve is expected to cut rates. Inflation data is sending mixed signals. Social Security faces insolvency warnings. And the stock market looks both unstoppable and precarious.

What should investors and everyday savers do in this moment of uncertainty?

In this special bonus episode, we sit down with Rob Berger — former attorney, Forbes deputy editor, founder of the Dough Roller blog, host of the Rob Berger Show on YouTube, and author of Retire Before Mom and Dad. With more than a quarter-million subscribers, Rob is known for his clear, kind, and fact-driven financial insights.

Together, we unpack today’s shifting economic landscape — from Fed policy to retirement strategies across generations.

What You’ll Learn in This Episode

• Why the Fed is caught between fighting inflation and protecting jobs — and what a rate cut could signal. 
• The risks of stagflation and why markets remain richly valued despite economic uncertainty. 
• How “the Magnificent 7” tech giants skew the S&P 500 — and what true diversification looks like. 
• Smart asset allocation rules of thumb for different life stages. 
• What Social Security insolvency really means, and how to plan for possible benefit cuts. 

Key Takeaways

• Expect uncertainty. Predictions about rate cuts and inflation are shaky at best — plan for volatility. 
• Diversify beyond the S&P 500. International funds, small caps, REITs, and bonds can balance your portfolio. 
• Social Security isn’t disappearing — but benefits could shrink. Build contingency plans now. 
• If you’re underfunded near retirement, act quickly. Spend less, save more, and prepare for difficult tradeoffs. 
• Young investors should focus on control. Education, savings rate, and priorities matter more than macro conditions. 

Resources & Links

Glossary

• CPI (Consumer Price Index): A measure of inflation tracking the average change in prices for goods and services. 
• Stagflation: A rare economic condition where inflation remains high while economic growth stalls. 
• Basis Points: One-hundredth of a percentage point (0.01%). A 25-basis-point rate cut = 0.25%. 
• S&P 500: A stock market index tracking 500 large U.S. companies, often used as a benchmark for U.S. equities. 
• TIPS (Treasury Inflation-Protected Securities): Bonds that adjust with inflation to preserve purchasing power. 

Chapters 

• 00:00 – 02:40 Introduction and why this is a bonus episode 
• 02:40 – 04:00 Rob Berger’s background and credentials 
• 07:27 – 13:00 Fed rate cuts, inflation, and stagflation risk 
• 13:00 – 18:00 Market valuations, diversification, and the “Magnificent 7” 
• 18:00 – 22:00 Social Security’s solvency and retirement planning in your 50s and 60s 
• 22:00 – 25:00 Gen Z financial challenges and what’s still within their control 
• 25:00 – 27:00 Predictions (and why predictions usually fail) 
• 27:00 – End Where to find Rob Berger and closing thoughts 

Final Thoughts

Economic uncertainty doesn’t mean financial paralysis. As Rob Berger reminds us, we should focus on what we can control: how much we save, how we diversify, and what priorities we choose.

Tune in to this timely episode, share it with friends, and subscribe so you never miss our smart, approachable conversations on money and freedom.

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Despite presidential proclamations, Social Security’s financial outlook is more troubled than ever.

Social Security plays a huge role in the budgets of many American retirees. About half of households with someone age 65 or older receive at least 50% of their income from Social Security. About one-quarter receive 90% of their income from the government program.

So the annual cost-of-living adjustment, or COLA, is of huge importance for many seniors. Without that bump in payments each year, many seniors would struggle to keep up with the rising costs of housing, healthcare, and groceries.

While we’re still a few months away from the official COLA announcement, history can offer some ideas of what to expect for next year. Here’s what you need to know.

Image source: Getty Images.

How the government calculates your COLA

Congress established automatic cost-of-living adjustments for Social Security based on inflation starting in 1975.

The metric used to determine how much prices have climbed from the prior year is the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. The CPI-W measures the increase in the price of a theoretical basket of goods weighted for the average spending of a working-age city dweller. It includes everything from housing to groceries to clothing to recreation.

The Bureau of Labor Statistics gathers thousands of data points from all around the country every month to calculate the CPI numbers. It releases those numbers monthly, typically in the second week of the month following the survey.

The Social Security COLA is automatically determined by the average year-over-year increase in the CPI-W for the third quarter of the year. So when the Bureau of Labor Statistics releases the September CPI-W numbers in early October, the Social Security Administration is able to announce the following year’s COLA.

But considering it’s already July, we can look at recent history to get a good idea of what to expect for next year’s COLA.

What history says could be coming in 2026

If you want to figure out what next year’s COLA will be, you have to start by figuring out what inflation will look like. Luckily, we already have inflation data from the first five months of the year, which is generally the best predictor of what the inflation data will look like over the next few months.

May’s CPI-W number was 314.839. That’s a 2.2% increase from May of 2024. However, early 2024 saw a rapid increase in inflation before it cooled off in the summer. That means continued increases in inflation from month to month through the end of the summer could result in a much higher cost-of-living adjustment.

Since 1974, when Congress first enacted automatic COLAs based on inflation, the CPI-W reading has increased about 0.65% from May to July, 0.94% from May to August, and 1.3% from May to September.

That includes periods of extreme inflation like the late 1970s and early 1980s. Inflation was even worse in that period than in 2021 through 2023. The Federal Reserve has been able to keep a better handle on inflation since then, so it might make sense to remove or reduce the weight of that period in our analysis. If we look at average inflation since 1985, the increases drop to just 0.41%, 0.61%, and 0.89%, respectively.

If we use the historical average dating back to 1974, next year’s COLA will be 3% if inflation increases in line with the average. If we use the historical average since 1983, next year’s COLA will come in at 2.6%.

Both of those numbers are above recent forecasts from the Senior Citizen’s League and independent analyst Mary Johnson. Both expect a 2.5% COLA for 2026, based on their proprietary models. On the other hand, the Social Security trustees expect next year’s COLA to come in between 2.4% and 3%, with 2.7% as their intermediate assumption.

We’re still a little over a month away from getting our first data point that counts toward next year’s COLA. As we get closer, retirees will get more clarity on what to expect. But based on history and expert models, they can expect a COLA roughly in line with, or perhaps a little higher than, last year’s 2.5% increase.