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Retirement Calculator With Social Security Benefits

Your Social Security Money Is Based On Your Income

How to Calculate Your Social Security Benefits

The amount of money you make during your career plays an important role in determining how much money you’ll 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 .

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

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.

Calculate My Social Security Income

These days thereâs a lot of doom and gloom about Social Securityâs solvency – or lack thereof. And regardless of whether you think Social Securityâs future is secure, the fact remains that you shouldnât plan on living exclusively off your Social Security benefits. After all, Social Security wasnât designed to make up a retireeâs entire income.

Still, many people do find themselves in the position of having to live off their Social Security checks. And even if you have other income sources in retirement, Social Security can make up a significant part of your retirement income plan. That’s why itâs important to know all the rules surrounding eligibility, benefit amounts, taxation and more.

Do you need help managing your retirement savings? To find a financial advisor who serves your area, try our free online matching tool.

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You’ll 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, you’ll receive 100% of your benefits. But if you decide to wait until age 70 to retire, you’ll 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, you’ll get 124% of your benefits.

Who Is Eligible For Social Security Benefits

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

Anyone who pays into Social Security for at least 40 calendar quarters is eligible for retirement benefits based on their earnings record. You are eligible for your full benefits once you reach full retirement age, which is either 66 and 67, depending on when you were born. But if you claim later than that – you can put it off as late as age 70 – youâll get a credit for doing so, with larger monthly benefits. Conversely, you can claim as early as age 62, but taking benefits before your full retirement age will result in the Social Security Administration docking your monthly benefits.

The bottom line: Youâre eligible for Social Security Benefits if youâve paid into the system for at least a decade, but your actual benefits will depend on what age â between 62 and 70 â you begin to claim them.

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Qualify For Retirement Benefits

You qualify for retirement benefits if you work in the United States and pay Social Security taxes, then you are assigned credits. Depending on your born year, you need a specific amount of credit to get retirement benefits.

For example – Your born year is 1929, or later, then you need 40 credits to be eligible for social security retirement benefits.

Do You Have Enough Money To Retire Now

Our Retirement Savings Calculator can help you answer that question, which depends on a number of different factors, including your current age, how much you have already saved for retirement and how many years of retirement income you think you’ll need in the future. If are considering an early retirement, you will want to think about how your pension and Social Security will be affected. If you have a pension with your employer, when are you eligible to start receiving it? Will it be a lump sum payment, a monthly pension amount or both? You may begin receiving Social Security benefits as early as age 62 or as late as age 70. Keep in mind, however, that if you retire early, your benefits are reduced by a certain percentage for each month before your full retirement age.

Our Financial Education articles can offer you additional financial tips about Social Security, taxes, health care and more to help you determine how much money you need to retire at age 50, age 55, age 60, age 62 and age 65.

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Will Your Expenses Decrease After You Retire

Retirement could be more expensive than you expect.

If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

Retirement could be more expensive than you expect.

If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

Maintain your lifestyle by planning ahead.

Maintain your lifestyle by planning ahead.

Many people find retirement is more expensive than expected.

Many people find retirement is more expensive than expected.

Information Needed To Calculate Social Security Benefits

Social Security Retirement Calculator

Keep in mind that the result youll get using our Social Security calculator is only an estimate, and calculates your potential benefits only. There may be other factors that affect the actual benefits youll receive, including the length of your work history, the type of jobs youve had, pensions youve earned and taxes you may have to pay on benefits.

This calculator doesnt account for situations in which eligible widows, ex-spouses or dependents may be able to collect someone elses Social Security benefits.

The amount of your Social Security benefit is generally based on your average income during your career. The formula is complicated but essentially gives you a percentage of your monthly income based on your earnings history. Our calculator will compute this for you.

To figure out your estimated monthly Social Security benefits, youll need to enter the following key pieces of information into the calculator:

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How To Calculate The Impact Of A Benefit Cut

Covisum, a provider of Social Security claiming software, recently updated its calculator to reflect the Social Security trustees’ latest projections. That includes a free version for consumers and a more complex paid version for financial advisors.

Another product, Maximize My Social Security, lets consumers evaluate which claiming strategy might best suit them for a $40 annual fee. It also has a separate version for financial advisors.

The free Covisum calculator can help individuals do a quick calculation based on their benefits alone and some key facts year of birth, full retirement age benefit amount, percentage of the benefit cut and the year that benefit cut occurs.

So someone turning their full retirement age this year, for example, can calculate the effect of a 23% reduction in benefits starting in 2034, as well as the effect of no benefit cut.For each scenario, the calculator will show the value of claiming either at age 65 or age 70, and when beneficiaries stand to get the maximum amount possible from the program.As beneficiaries live longer, the value of waiting to claim until 70 goes up, as demonstrated in the difference in total benefits per the tool’s calculations.

To be sure, the free calculator is just a starting point when it comes to getting a sense of the trade-offs when claiming Social Security, according to Joe Elsasser, founder and president of Covisum.

Key Investing And Retirement Definitions

401: This is a plan for retirement savings that companies offer employees. A 401 plan gives employees a tax break on money they contribute. Contributions are automatically withdrawn from employee paychecks and invested in funds of the employees choosing .

Compound interest: The interest you earn on both your original deposit and on the interest that original deposit earns. For example, a $1,000 investment earning 6% compounded annually could become roughly $4,300 in 25 years.

Contribution limits: The IRS puts limits on the amount of money that can be contributed to 401s and IRAs each year. These limits sometimes change from year to year.

Financial advisor: A financial advisor offers consumers help with managing money. Financial advisors can advise clients on making investments, saving for retirement, and monitoring spending, among other things. A financial advisor can be a professional, or a digital investment management service called a robo-advisor.

IRA: An individual retirement account is a tax-advantaged investment account individuals use for retirement savings.

Income: The money you get from working, investing, or providing goods or services.Inflation: This happens when the price of goods and services increases as time passes. The result is a decrease in purchasing power, or the value of money.

Nest egg: A sum of money you have set aside for the future in this case, retirement.

Returns: The money you earn or lose on an investment.

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How Big Will The Social Security Cola Be For 2023

There is a variety of estimates floating around. Some experts say the 2023 Social Security COLA could be as high as 10%. Something more around 9% is probably more likely. Either way, this could be the largest Social Security COLA since 1981.

When you are retired on a fixed income, every penny counts. A large Social Security Cost of Living … Adjustment could help ease the pain from inflation on retirees budgets.

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Is Social Security All You Need To Retire

How To Calculate Social Security Retirement

Generally not. Social Security is not intended to be your only source of retirement income. On average, beneficiaries receive about 40% of their pre-retirement income through Social Security benefits. According to the Social Security Administration, most financial advisers say youll need at least 70% of your pre-retirement income to comfortably meet your expenses in retirement.

Here are few other ways to save for retirement:

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Impact Of Inflation On Retirement Savings

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.

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.

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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.

What Income Reduces Social Security Benefits

Best Social Security Retirement Calculator I’ve Seen…Yet (2018)

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 2021, if you are retired and haven’t reached full retirement age, the SSA will deduct $1 from your benefits for every $2 earned over $18,960. In the year you reach full retirement age, the SSA will deduct $1 for every $3 earned over $50,520. For the 2022 tax year, these thresholds are slightly higher, at $19,560 and $51,960, respectively.

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At What Age Do You Plan To Retire

The age at which you retire can have a major effect on the size of the Social Security benefits youll receive. The longer you wait up until age 70, the more benefits you may be able to collect.

Enter the age at which you would like to retire and begin collecting benefits. You can get retirement benefits as early as age 62.

Is There A Maximum Benefit

Yes, there is a limit to how much you can receive in Social Security benefits. The maximum Social Security benefit changes each year. For 2022, itâs $4,194/month for those who retire at age 70 . Multiply that by 12 to get $50,328 in maximum annual benefits. If that’s less than your anticipated annual expenses, youâll need to have additional income from your own savings to supplement it.

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How To Calculate Taxable Social Security Benefits

How much of an individual’s Social Security benefit is taxed?

And what is combined or provisional income?

Our Retirement Daily’s Robert Powell caught up with Jeffrey Levine, CPA and tax pro from Buckingham Strategic Wealth Partners, to answer these common tax questions.

Recommended Read: A Guide to Social Security Tax

Watch the video interview above, or read the video transcript below.

TurboTax Live experts look out for you. Expert help your way: get help as you go, or hand your taxes off. You can talk live to tax experts online for unlimited answers and advice OR, have a dedicated tax expert do your taxes for you, so you can be confident in your tax return. Enjoy up to an additional $20 off when you get started with TurboTax Live.

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