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Retirement Benefits Calculator Social Security

Do You Expect To Have Additional Sources Of Retirement Income Beyond Social Security

Social Security Retirement Calculator

Continue saving in the coming years.

Social Security won’t replace all of your pre-retirement income. On average, Social Security replaces 40 percent of a worker’s income. That means your retirement savings, pension, 401, or Individual Retirement Account will need to fill the gap. Claiming at your full Social Security benefit age or later can minimize this gap and maximize your monthly benefit. If you claim before your full retirement age, your monthly benefit could be reduced by as much as 30 percent.Learn more about saving for retirement.

You have an opportunity to continue growing your money.

If you can, get the highest monthly Social Security benefit possible by claiming at your full Social Security benefit age or later. If you claim before your full retirement age, your monthly benefit could be permanently reduced by as much as 30 percent. Also, take advantage of catch-up contributions to your 401 or Individual Retirement Account . Lastly, avoid losing your retirement savings to unnecessary tax penalties. If you withdraw your 401 or IRA savings before age 59½, you will likely face an early withdrawal penalty.Learn more about how retirement savings grow.

It’s a perfect time to start saving.

It’s never too late to start saving!

There are many ways to plan for a secure retirement outside of Social Security.

It’s never too late to start saving!

A type of retirement savings account offered by employers to help their employees save for retirement.

Life Expectancy And Retirement Income

Nobody knows how long they will live. This is one of the most challenging facts about retirement planning: How many years of retirement income will you need? Save too little and you risk spending your savings and relying solely on Social Security income.

Looking at average life expectancy is a good place to start. The Social Security Administrations life expectancy calculator can provide you with a solid estimate, based on your date of birth and gender. Just remember: Average calculations cant take into account your health and lifestylenow or in retirementor family history that could impact your life expectancy, so youll want to consider them in any calculations you do.

Also Check: At What Age Do Medicare Benefits Start

Growing Your Retirement Income

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

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Create A My Social Security Account

To see all of your Social Security benefits online, youll first need to create a My Social Security account. Heres what to do.

1. Go to ssa.gov on your browser and select my Social Security.

2. Next, click Create an Account.

3. Youll be prompted to sign in with your ID.me account or login.gov account unless you created an account before Sept. 18, 2021. Note that youll need to create one of those accounts if you dont have one.

4. Once you have an account, youll need to agree to the terms of service to continue.

5. Next, youll need to verify your identity. The Social Security Administration will send a one-time security code to your email that youll need to enter within 10 minutes to continue to your account.

You should now have access to all of your Social Security statements and other details online.

How Does The Calculator Estimate My Retirement Benefits Payment

10 free or cheap Social Security calculators to help you plan ...

Our simplified estimate is based on two main data points: your age and average earnings. Your retirement benefit is based on how much youve earned over your lifetime at jobs for which you paid Social Security taxes. Your monthly retirement benefit is based on your highest 35 years of salary history. You can get your earnings history from the Social Security Administration .

Your Social Security benefit also depends on how old you are when you take it. You can start collecting at age 62, the minimum retirement age, but youll get a bigger monthly payment if you wait until full retirement age, which is 66 but is gradually moving to 67 for people born in 1960 or after. If you can wait until 70 to start collecting, youll receive your maximum monthly benefit.

A single person born in 1960 who has averaged a $50,000 salary, for example, would get $1,349 a month by retiring at 62 the earliest to start collecting. The same person would get $1,927 by waiting until age 67, full retirement age. And he or she would get $2,389, the maximum benefit on those earnings, by waiting until age 70. Payments dont increase if you wait to collect past 70.

Other factors affecting the size of your benefit include whether youve worked for state or local government for more than 10 years your Social Security payment may be decreased if you paid into the civil service retirement program, for example.

Read Also: Are Medicare Benefits The Same In Every State

Are You Saving Enough For Retirement

It’s never too soon to start saving for retirement. When you have a spouse, children, a mortgage and college tuition to think about, competing financial priorities can make it more challenging to save for your retirement years. However, each year you delay saving for your retirement means facing the financial burden of catching up with your savings down the road if you want to achieve your retirement objectives. Are you curious about whether your retirement savings are on track for your age? Here are some average retirement savings by age to help you gauge your progress. By using our Retirement Savings Calculator, you can figure out how long your current savings might last you in retirement and what additional annual savings may be necessary to meet your goals.

How To Calculate Social Security Benefits In Excel

If you are in your late 50s and approaching retirement, you can create a useful model of your future benefits. It works best to do this in a Microsoft Excel spreadsheet, as follows:

  • Using a recent Social Security statement, list in spreadsheet column A your taxable Social Security earnings year by year.
  • List in column B the most recently published NAWI adjustment factors as published by the SSA.
  • Multiply columns A and B and output the result to column C.
  • Identify in column D the 35 highest values in column C. Add these together and divide the sum by 420 . This will approximate your AIME.
  • Use the most recently published bend points to convert your AIME into a PIA.

You also can fill in hypothetical values for estimated taxable Social Security earnings in future years until you plan to stop working. To be conservative, use a NAWI adjustment factor of 1.0000 in column B for all future years.

A financial advisor who fully understands this process can help verify your calculations, advise you on when to start Social Security benefits, and estimate the future benefits you can expect to receive.

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How To Increase Your Benefit Amount

If your estimate is lower than you expected , there are steps you can take to boost your benefits:

  • Double-check your work history: The Social Security Administration calculates your benefits by taking an average of your earnings over the 35 highest-earning years of your career and then adjusting that number for inflation. To earn as much as possible, you’ll need to have worked for at least 35 years before you file.
  • Work a little longer: Even if you have worked 35 full years, working a little longer can still increase your benefits. Chances are, you’re earning more now than you were at the beginning of your career. Because the SSA only includes your highest-earning years in your average, working a few more years now when your salary is higher can result in larger payments.
  • Delay claiming benefits: You can file for Social Security at age 62 or anytime after that, but the longer you wait , the more you’ll receive. Delay benefits by even a year or two, and you could potentially earn hundreds of dollars more per month.
  • Take advantage of all the benefits you’re entitled to: Most workers will qualify for retirement benefits, but you could also be eligible for spousal benefits, divorce benefits, or survivors benefits. These payments could significantly increase your monthly income, so it’s wise to take full advantage of them if you qualify.

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Four Ways Benefits Can Be Increased Or Decreased

How to Calculate Your Social Security Benefits

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.

Also Check: Eligible Age For Social Security Benefits

Social Security Benefits Formula 2023

The Social Security formula for the year 2023 — which applies to anyone born in 1961 — is as follows:

  • Multiply the first $1,115 of your AIME by 90%.
  • Multiply any amount between $1,115 and $6,721 by 32%.
  • Multiply any amount over $6,721 by 15%.
  • Add the results from the three steps above and round to the next lowest $0.10.
  • So for example, if your AIME was $3,000, you would do the following:

  • Multiply the first $1,115 by 90%, giving you $1.003.50.
  • Multiply the remaining $1,885 by 32%, giving you $602.20.
  • Multiply any amount over $6,172 by 15%, giving you $0.00.
  • Add the results from the three steps above, which gives you $1,605.70.
  • In the formula above, $1,115 and $6,721 are known as the bend points. These are the only parts of the Social Security benefits formula that change from one year to the next. You can find the bend points for any previous year on the Social Security Administration website.

    Your Social Security Money Is Based On Your Income

    The amount of money you make during your career plays an important role in determining how much money youll receive from Social Security. If you work a total of 45 years, only the highest 35 years of earnings would count toward your benefit amount. For example: If you earned $35,000 for the first 10 years of your employment history and $55,000 for 35 years, only the $55,000 income would count .

    Read Also: Estimate Social Security Retirement Benefits

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    Social Security In The Us

    Before Social Security , care for the elderly or disabled in the U.S. wasn’t a federal responsibility if they weren’t cared for by family, it fell into the hands of municipalities or states. This changed in 1935 when the Social Security Act was first established in the U.S. by President Franklin Roosevelt. The first taxes were collected starting in January 1937, which enabled monetary assistance to qualified Americans with inadequate or no income. Originally, SS was just a program that paid out retirement benefits, but a 1939 change added survivors benefits for a retiree’s spouse and children. In addition, in 1956, disability benefits were added.

    Today, SS in the U.S. plays a very important role in keeping a lot of older Americans out of poverty. For most Americans in retirement, it is their major source of income, and for a significant percentage, it is their only source of income, even though SS was never intended to be a full replacement of income. On average, SS pays lower-wage earners higher relative benefits than higher-wage earners. In addition, lower-wage earners tend to pay less tax and are more likely to receive social insurance disability income and survivor benefits. SS is sometimes referred to as Old Age, Survivors, and Disability Insurance .

    Social Security Facts

    Impact Of Inflation On Retirement Savings

    How To Calculate Social Security Retirement

    Inflation is the general increase in prices and a fall in the purchasing power of money over time. The average inflation rate in the United States for the past 30 years has been around 2.6% per year, which means that the purchasing power of one dollar now is not only less than one dollar 30 years ago but less than 50 cents! Inflation is one of the reasons why people tend to underestimate how much they need to save for retirement.

    Although inflation does have an impact on retirement savings, it is unpredictable and mostly out of a person’s control. As a result, people generally do not center their retirement planning or investments around inflation and instead focus mainly on achieving as large and steady a total return on investment as possible. For people interested in mitigating inflation, there are investments in the U.S. that are specifically designed to counter inflation called Treasury Inflation-Protected Securities and similar investments in other countries that go by different names. Also, gold and other commodities are traditionally favored as protection against inflation, as are dividend-paying stocks as opposed to short-term bonds.

    Our Retirement Calculator can help by considering inflation in several calculations. Please visit the Inflation Calculator for more information about inflation or to do calculations involving inflation.

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    How Much Social Security Will You Get When You Retire

    The amount of your Social Security benefit is a function of your full retirement age. If you were born in 1960 or after, your normal retirement age when you are eligible to receive full or unreduced Social Security benefits is 67. When you choose to retire is central to your retirement planning strategy because it activates your various streams of retirement income: drawing upon Social Security and your pension, if you have one, as well as beginning withdrawals from your other retirement accounts, such as your 401 or IRA, and other possible income sources like annuities. With the right planning, you may be able to retire early and depend on alternative sources of retirement income until you reach your normal retirement age, at which point you can start collecting your full Social Security benefits. You also can increase your Social Security benefit amount by waiting beyond your full retirement age to retire. However, the benefit increase stops when you reach age 70. Access my Social Security Retirement Calculator to learn more.

    Our Retirement Savings Calculator gives you the option of including your Social Security benefits in its calculations to determine if you have enough funds to retire. Discover how early retirement can affect your Social Security benefits and the truth behind some common Social Security myths.

    How Much Savings Do You Need To Retire With A Pension

    Having a pension helps provide you with an additional source of retirement income and eases some, but probably not all, of the burden of saving for retirement. If you are fortunate enough to have a retirement pension plan provided by your employer, you are in the minority these days. According to the U.S. Bureau of Labor Statistics, only 13% of private industry workers had access to both defined benefit and defined contribution ) retirement plans at their workplace in March 2018.

    With a defined benefit plan, your employer makes contributions to the plan. You then receive this pension money in retirement either as a lump sum or as a monthly payment or as some combination of the two. If your employer offers a pension plan, its important to understand how it works and its benefits and how your pension fits into your overall retirement savings strategy. Our Retirement Savings Calculator incorporates your inflation-adjusted pension plan benefit, if you have one.

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    Youll Get More Money If You Wait To Cash In On Your Social Security

    You likely know that if you wait until full retirement age to collect your Social Security benefits, youll receive 100% of your benefits. But if you decide to wait until age 70 to retire, youll get even more money.

    Your benefits will increase by a percentage for each month you delay receiving your benefits past full retirement age up to age 70. If you were born in 1960 or later and wait to start receiving Social Security benefits until age 70, youll get 124% of your benefits.

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