I understand that those qualifying for maximum benefits will get a 3.7% raise in 2018 rather than the 2% raise everyone else gets. Why is that? I qualified for $2622 at FRA in 2015 when I turned 66 which was close to the maximum. I have not yet taken my benefit although I am receiving the spouses benefit since I was married for over 10 yr. What will my benefit be if I wait till age 70?

Hi,

There's really no 'maximum' Social Security benefit rate. When so-called maximum rates are published, they are generally referring to the highest possible benefit rate that a person turning full retirement age (FRA) in that year could be paid if they started drawing at FRA. However, the actual benefit rate for each person is a variable that depends on their full earnings history, year of birth and when they start drawing their benefits.

Social Security uses a wage-indexing process that converts each person's yearly earnings to reflect changes in average annual wages based on their year of birth (https://www.ssa.gov/pubs/EN-05-10070.pdf). They then calculate the person's basic benefit rate based on an average of their highest 35 years of wage-indexed earnings, and then cost of living increases (COLAs) are added starting with the year that the person turns age 62. Thus, you can figure the maximum amount that an individual could get at any given point in time if they had the highest possible 35 wage-indexed years of earnings based on their year of birth. However, if that person continues to work and earns more than in one of their previous highest 35 years, they can continue to increase their benefit rate indefinitely. And on top of that, if they wait until age 70 to start drawing their benefits as opposed to starting at FRA, they can increase the rate they would otherwise receive by up to 32%.

So, if you've read something that says that the maximum benefit amount increased by 3.7%, it's likely due to a combination of an increase in the maximum Social Security wage base and the regular Social Security COLA. Your personal benefit rate if you wait until age 70 to start drawing your benefits will be 32% higher than your primary insurance amount (PIA). Your PIA is the amount that you would have received if you had started drawing at FRA, adjusted for any higher earnings years that you may have had after FRA if applicable.

Best, Jerry