How Does Social Security Determine Your Benefit

Calculate Your Bend Points

This step allows you to calculate your primary insurance amount . Social Security is set up so that lower income workers have a higher percentage of their wages replaced upon retirement. The more you earn, the lower the percentage of your working wages that you will receive. These different tiers, or bend points, are set by law. Here is how they work. Your PIA is calculated by finding the sum of 90% of your AIME up to $926, 32% of AIME between $926 and $5,583, and 15% of AIME above $5,583. For example, if you have an AIME of $800, then your PIA would be $720 per month. Now it is time to make any necessary adjustments to your PIA.

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How Much Will Social Security Increase In 2023

The 2023 COLA is 8.7%. Here’s how that breaks down for different groups, according to the Social Security Administration .

Predictions fluctuated greatly earlier this year in June, the nonpartisan Committee for a Responsible Federal Budget estimated benefits would increase by as much as 10.8%.

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In July, Marc Goldwein, the organization’s senior policy director, predicted that if inflation remained on its then-current trajectory, the increase would be 11.4%, the highest ever.

But, by August, Richard Johnson, director of the retirement policy program at the Urban Institute, told AARP that “somewhere in the 9% range is probably a reasonable guess.”

When You Can Continue Receiving Workers Comp Benefits

Your benefits may continue after you retire or take a pension if you havent voluntarily removed yourself from the workforce and other certain conditions are met. These could include:

• You arent capable of any level of work due to your injury.
• Your employer is unable to accommodate your physical restrictions so you stop working and arguably search for a suitable alternative.
• A change in circumstances after you stop work you go back into the workforce.
• You have evidence that you had done some search for suitable work.

Under these circumstances, you may continue to receive full or partial workers compensation benefits, depending on whether you receive other benefits like a retirement pension or Social Security.

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Fact #: Social Security Benefits Are Modest

Social Security benefits are much more modest than many people realize the average Social Security retirement benefit in January 2022 was about $1,614 per month, or about $19,370 per year. For someone who worked all of their adult life at average earnings and retires at age 65 in 2022, Social Security benefits replace about 37 percent of past earnings. Social Securitys replacement rate fell as the programs full retirement age gradually rose from 65 in 2000 to 67 in 2022.

Most retirees enroll in Medicares Supplementary Medical Insurance and have Part B premiums deducted from their Social Security checks. As health care costs continue to outpace general inflation, those premiums will take a bigger bite out of their checks.

Social Security benefits are also modest by international standards. The U.S. ranks just outside the bottom third of developed countries in the percentage of an average workers earnings replaced by the public pension system.

Social Security is important for children and their families as well as for older adults. Over 6.5 million children under age 18 lived in families who received income from Social Security in 2019. That number included nearly 2.8 million children who received their benefits as dependents of retired, disabled, or deceased workers, as well as others who lived with parents or relatives who received Social Security benefits.

Social Security lifted 1.1 million children above the poverty line in 2020, as the chart shows.

Lost Or Stolen Federal Payments

Report your lost, missing, or stolen federal check to the agency that issued the payment. It’s usually one of these paying agencies. If your documentation indicates it’s a different agency, and you need its contact information, look in the A-Z Index of U.S. Government Departments and Agencies.

To get an update on your claim, contact the Treasury Department Philadelphia Financial Center at 1-855-868-0151, option 1.

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What Income Reduces Social Security Benefits

If you start taking Social Security benefits before you reach full retirement age, any income you earn over the annual limit until you reach full retirement age will lower your benefit eligibility for that year. In 2022, if you are retired and haven’t reached full retirement age, the SSA will deduct $1 from your benefits for every $2 earned over $19,560. In the year you reach full retirement age, the SSA will deduct $1 for every $3 earned over $51,960. For the 2023 tax year, these thresholds are slightly higher, at $21,240 and $56,520, respectively.

Social Security Survivor Benefits For Spouses

Surviving spouses can receive benefits based on the benefit amount that the deceased was receiving from Social Security at the time of death.

• A surviving spouse can get reduced benefits as early as age 60. Full benefits are available at full retirement age. Benefits are for life.
• A surviving spouse who has a disability can collect benefits as early as age 50. The benefit begins upon the death of the retiree and continues until the surviving spouse is age 65. At that point, they are eligible for the aged benefit.
• Surviving spouses can get benefits at any age if they take care of their spouses child who is under age 16 or disabled and receives Social Security benefits.
• Surviving divorced spouses who are age 60 or older can get survivor benefits if the marriage lasted at least 10 years. Divorced spouses dont have to meet the length-of-marriage rule if they take care of the former spouses child who is younger than age 16 or disabled.

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What Is The Average Workers Comp Settlement

AverageWorkersCompSettlement Amount. There are a variety of factors that go into how much an employee gets in a workerscompsettlement. Overall, the average employee gets around $20,000 for their payout. The typical range is anywhere from $2,000 to $40,000. This may seem like a huge range in possible payout amounts.

How Social Security Benefits Are Calculated

Similar to a pension, Social Security provides a stream of retirement income that continues as long as the recipient is alive . And also like a pension, Social Security calculates its benefits by applying an income replacement formula, based on the earnings of the individual during his/her working years.

The difference, however, is that while a pension might simply be calculated based on an individuals last-3 or last-5 years of earnings, Social Security is actually paid out based on an average of 35 years of lifetime earnings. And it doesnt have to be a consecutive 35 years or the last 35 years Social Security uses whatever the highest 35 years were over the workers entire career.

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Four Ways Benefits Can Be Increased Or Decreased

There are four ways the starting benefit can be permanently increased or reduced from the PIA calculated at age 62:

• Starting benefits earlyBenefits may begin as soon as age 62, but they are permanently reduced for every month between the onset of benefits and FRA.
• Delaying benefits beyond full retirement ageDelayed retirement credits can permanently increase benefits, and they are awarded for every month between FRA and a later onset of benefits.
• Starting early and continuing to workIf you start benefits before your FRA and keep working, the SSA may deduct the part of your benefits that exceeds a threshold. However, any such deductions are not permanent. When you reach your FRA, the SSA recalculates your benefits and credits back any deductions.
• Continuing to work, periodEven if you dont start benefits early, you can increase your benefits by continuing to work up to any age. Any year in which your indexed earnings are higher than one of your 35 previous highest years will boost your benefits. However, after age 60, you will not receive wage indexing, and after age 62, you will not receive bend point inflation indexing.

All four points are related to your starting Social Security benefits. Keep in mind that when your benefits start, the COLA will increase them annually. If you start benefits at age 66, your PIA automatically increases with the applicable COLAs from the years in which you turn 63 through 66.

How Social Security Cost

So, just how is theSocial Security increase calculated each year? The process is fairly straightforward. They use the Consumer Price Index for Urban Wage Earners and Clerical Workers to calculate the COLA. The CPI-W is observed at the end of October of the current year, and that value is compared to the CPI-W at the end of October of the last year, in which there was a COLA increase.

If there is an increase in the CPI-W, then the COLA increase will see the same percentage increase. For example, if the CPI-W increases by 5% from one year to the next, you can expect to see a 5% increase in your Social Security check each month.

There could be occasions where the CPI-W shows a decrease in the cost of goods and services from one year to the next. In that case, there will be no adjustment to your benefit amount. You will never see a decrease in your benefit payments as a result of the COLA.

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Fact #: Social Security Provides A Foundation Of Retirement Protection For Nearly All People In The Us

97% of older adults either receive Social Security or will receive it.

Almost all workers participate in Social Security by making payroll tax contributions, and almost all older adults receive Social Security benefits. In fact, 97 percent of older adults either receive Social Security or will receive it, according to Social Security Administration estimates.

The near universality of Social Security brings many important advantages. It provides a foundation of retirement protection for people at all earnings levels. It encourages private pensions and personal saving because it isnt means-tested it doesnt reduce or deny benefits to people whose income or assets exceed a certain level. Social Security provides a higher annual payout than private retirement annuities per dollar contributed because its risk pool is not limited to those who expect to live a long time, no funds leak out in lump-sum payments or bequests, and its administrative costs are much lower.

Universal participation and the absence of means-testing make Social Security very efficient to administer. Administrative costs amount to only 0.6 percent of annual benefits, far below the percentages for private retirement annuities. Means-testing Social Security would impose significant reporting and processing burdens on both recipients and administrators, undercutting many of those advantages while yielding little savings.

How Social Security Disability Benefits May Affect My Workers Compensation Claim

The lawyers for workers comp at Pearson Koutcher Law pride themselves on representing individuals who have been injured in some kind of work accident and need workers compensation benefits. Nevertheless, we are often asked questions about Social Security disability from our clients and must explain the impact receiving Social Security disability benefits has on their pending workers compensation claim in PA.

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Does Working Past Age 70 Affect Your Social Security Benefits

Dear Carrie,

I’m turning 70 and about to start collecting Social Security even though I’m still working and intend to keep working for a couple more years. Since I’m past full retirement age, will I continue to pay Social Security taxes? Also, will continuing to work affect my monthly benefit?

A Reader

Dear Reader,

First, congratulations on waiting until 70 to collect your Social Security benefits. By doing so, you maximized your monthly payout. That’s a smart move for many folks!

But while Uncle Sam gives you a bonus for waiting to collect Social Security benefits, he doesn’t give you a dispensation from paying Social Security taxes. As long as you have earned income , you’re required to pay Social Security taxes on up to the annual payroll limitation$147,000 in 2022. So, yes, if you continue to work, you’ll continue to pay into Social Security and other payroll taxes.

Fortunately for you, since you’re past your full retirement age , there’s no benefit reduction based on income. You’re entitled to full benefits no matter your income level. However, earned income may impact your benefit if you take Social Security before your FRA.

Whether or not your continued income has a positive effect on the amount of your monthly Social Security benefit depends on how much money you made in the past and how much you’re making now. Here’s why.

What Happens To Ssdi When You Also Receive Workers Comp Benefits

Workers compensation and other public benefits that you receive must be reported to the Social Security Administration when you apply for or receive SSDI benefits. The reason is that the combined total of the workers comp and state disability benefits along with your monthly SSDI cannot exceed 80% the average current earnings you had when you became disabled and were no longer able to work.

What this means in terms of your monthly SSDI payment is best demonstrated by an example provided by Social Security of a worker with average monthly earnings of $4,000 who becomes disabled and can no longer work. The disabled worker, the workers spouse and their two children qualify for SSDI benefits of $2,200 each month.

However, the worker also receives $2,000 a month through workers compensation, which makes the total state and federal benefits $4,200 or $1,000 more than 80% of the persons average current earnings when employed. The family continues to receive their workers compensation monthly payment, but the SSDI benefit is reduced by $1,000 until the compensation benefits end or the worker reaches full retirement age when SSDI converts to retirement benefits.

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Social Security For The Disabled

People who are disabled, are dependents of retired or disabled workers, or are surviving spouses/children may also receive benefits. Note that this is supplementary information and that the Social Security Calculator only provides calculations for retirement benefits.

The SSAs definition of disability refers to total disability, so partial or short-term disabilities are not qualified for benefits. Under the SSAs rules, a person is disabled only if they meet all of the following conditions:

• They cannot do work they did before
• The SSA decides that they cannot adjust to other work because of their medical condition
• The disability has lasted or is expected to last at least one year or to result in death

Benefits usually continue until beneficiaries are able to work again. Disability beneficiaries that reach full retirement age will have their benefits converted into retirement benefits, with the amount remaining the same. It is against the law to receive both disability and retirement benefits at the same time.

Social Security Disability Insurance

Supplemental Security Income

In some situations, it is possible to receive both SSDI and SSI. This usually happens when a qualified application for SSDI is granted low enough an SSDI benefit to make the applicant also eligible for SSI.

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When Is It Worthwhile To Continue Working While On Social Security For Higher Benefits

In the end, whether or how beneficial it is to continue to work while on Social Security in order to generate higher Social Security benefits in the future depends heavily on two factors: what income replacement tier the Social Security recipient will be in and what the existing earnings history already was . Similar to the consequences of retiring early , the consequences vary depending on where the individual is in the AIME calculation.

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Beginning Benefits Before Fra

If you choose to begin to receive benefits before you reach your full retirement age, one or both of the following calculations will apply:

• 5/9 of 1%: Your benefits are reduced by 5/9 of 1% per month, up to a maximum of 36 months, depending on how many months you have until you reach FRA.
• 5/12 of 1%: If you are more than 36 months away from reaching FRA, the reduction above is applied, and then for the number of months greater than 36, the benefit is further reduced by 5/12 of 1% per month.

Therefore, if your FRA is age 66, your benefits would be reduced by 25% if you begin taking them at age 62. Find that figure by taking 5/9 of 1%, or 0.56 multiply by 36 months to get 20%. Then, 5/12, or 0.42, multiplied by the remaining 12 months, is 5% for a total of 25%.

Can I Still Work And Collect Social Security Benefits

You can collect Social Security benefits while working, starting at age 62. However, your age and earnings may impact the amount of benefits you receive during that time. Working won’t permanentaly reduce the Social Security benefits you receive, nor will your withheld benefits disappear.

Once you reach full retirement age:

• Your monthly benefit will increase, taking into account prior benefits detained due to earnings.
• Extra income no longer decreases your benefits.

If you work and collect Social Security when you are:

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It Depends On The Type Of Benefit And Other Factors

Most people think of Social Security benefits as a monthly payment that you start getting in retirement and receive for the rest of your life. In fact, Social Security is an umbrella term for several federal benefits programs. One of the largest government programs anywhere in the world, Social Security is expected to have paid out more than $1 trillion to about 65 million Americans in 2020.

There are three key groups of people who receive Social Security benefits: retired workers, survivors of retirees, and people with disabilities and their families. How long does Social Security last? It depends on the type of benefit.