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Social Security Retirement Benefits Calculator

When To Start Your Retirement Benefits

How to Calculate Your Social Security Benefits

It is always a good idea to wait as long as possible to start your retirement benefits. The longer you wait, the higher your benefit amount will be. If you start your benefits before full retirement age , then you will see a fairly significant reduction in your benefits. If you can wait until age 70, then you can see an increase in your benefit amount. There is no reason to wait past age 70 as your benefit increases will stop there. So, you should decide when to start your benefits based on your own personal financial situation. If you are unsure, then you should talk to a financial planner to help you make that decision.

Are Your Benefits Taxable

So, are your Social Security benefits taxable? The answer depends on what your total income for the year looks like. If your income is less than $25,000 as an individual taxpayer, then you will not owe income taxes on your Social Security benefits. The average Social Security benefit amount is about $18,000 per year, so most people will not owe taxes on their Social Security payout. For married couples, the income limit increases to $32,000. As your income increases, then you will start to owe taxes on your benefits. For single filers with income between $25,000 to $34,000, you will owe taxes on half of your benefits. The same applies for joint filers with income between $32,000 and $44,000. If you have an income above these tiers, then you will owe taxes on 80% of your benefits. This is the most that you will owe regardless of your income level.

When Should You Start Collecting Social Security Benefits

The earliest you can start receiving your Social Security benefits is at age 62 — though you’ll receive a smaller amount than if you wait. If you do wait until full retirement age , you can collect more money — but over fewer years. However, everyone’s situation is different. The Social Security Administration says “there’s not a single ‘best age’ for everyone and, ultimately, it’s your choice.”

Katherine Tierney, senior retirement strategist of client needs research at financial services firm Edward Jones, suggests asking yourself these questions: When do you want to retire and when can you afford to retire?

Looking at when you can afford to retire depends on the lifestyle you want, as well as where you’ll live when retired, Tierney said. It also depends on how much you’ve got saved for retirement and how much you’ve contributed to your 401. You should also consider if you’ll have other forms of income in retirement, such as a part-time job or a pension. Your health and life expectancy are also other factors to consider.

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Who Is Eligible To Collect Social Security Retirement Benefits

Workers who are at least age 62 and who have worked at least 10 combined years at jobs for which they paid Social Security taxes are eligible for Social Security retirement benefits. In many cases, spouses, widows and divorcees are eligible for Social Security retirement benefits based on a spouses or ex-spouses earnings history. Unmarried children 18 and younger can also get survivors benefits. You must be a U.S. citizen or lawful alien to collect benefits.

Calculate Your Benefits On Your Own

How Do Dividends Affect Social Security Benefits?

This is the most complicated way of determining how much Social Security pays you upon retirement. While it is much easier to use an online calculator, it is possible to calculate your benefit amount manually on your own. It requires a moderately complex computation based on your earnings history, retirement age, and a couple of other factors. We will dive into deep detail on how to perform this calculation in the next section.

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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

Make Necessary Adjustments To Pia

Adjustments to your PIA are done to account for cost of living adjustments and retirement age. If you wait to receive benefits until your full retirement age , then you will receive 100% of your benefits. However, if you choose to start your benefits early, then you will see a reduction in your benefits. In fact, waiting past full retirement age can allow you to see an increase in your PIA. Starting your benefits just a small number of months early can permanently reduce the benefits you will receive. So, it is always wise to wait until full retirement age if possible to start your benefits.

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List Each Year’s Earnings

Your earnings history is shown on your Social Security statement, which you can now obtain online.

In the table below, sample earnings for a hypothetical worker born in 1953 are shown in Column C. Only earnings below a specified annual limit are included. This annual limit of included wages is called the “Contribution and Benefit Base” and is shown as Max Earnings in Column H in the table.

Other Sources Of Retirement Income

Social Security Retirement Calculator

Home Equity and Real Estate

For some people in certain scenarios, preexisting mortgages and ownership of real estate can be liquidated for disposable income during retirement through a reverse mortgage. A reverse mortgage is just as it is aptly named â a reversing of a mortgage where at the end , ownership of the house is transferred to whoever bought the reverse mortgage. In other words, retirees are paid to live in their homes until a fixed point in the future, where ownership of the home is finally transferred.

Annuities

A common way to receive income in retirement is through the use of an annuity, which is a fixed sum of periodic cash flows typically distributed for the rest of an annuitant’s life. There are two types of annuities: immediate and deferred. Immediate annuities are upfront premiums paid which release payments from the principal starting as early as the next month. Deferred annuities are annuities with two phases. The first phase is the accumulation or deferral phase, during which a person contributes money to the account . The second phase is the distribution, or annuitization phase, during which a person will receive periodic payments until death. For more information, it may be worth checking out our Annuity Calculator or Annuity Payout Calculator to determine whether annuities could be a viable option for your retirement.

Passive Income

Inheritance

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Do You Plan To Continue Working In Your 60s

Working in your 60s will help you maximize your income and savings.

Your benefits are based on your highest 35 years of earnings. Each year of work can add higher earnings to your record by replacing years with low earnings such as those when you were a student, were unemployed, or took time off to care for someone. When you work and wait to claim until age 70, you can increase your monthly benefit by more than 75 percent! Working in your 60s also gives you more time to save on your own for retirement.Review your earnings record on my SocialSecurity.

Working in your 60s will help you maximize your income and savings.

Your benefits are based on your highest 35 years of earnings. Each year of work can add higher earnings to your record by replacing years with low earnings such as those when you were a student, were unemployed, or took time off to care for someone. When you work and wait to claim until age 70, you can increase your monthly benefit by more than 75 percent! Working in your 60s also gives you more time to save on your own for retirement.Review your earnings record on my SocialSecurity.

You can maximize your benefits even if you work fewer hours or stop working.

You can maximize your benefits even if you work fewer hours or stop working.

Consider working in your 60s for an extra boost to your income and savings.

Consider working extra years in your 60s for an extra boost to your income and savings

Factors That Affect How Much You’ll Get In Retirement

Gordon Scott has been an active investor and technical analyst of securities, futures, forex, and penny stocks for 20+ years. He is a member of the Investopedia Financial Review Board and the co-author of Investing to Win. Gordon is a Chartered Market Technician . He is also a member of CMT Association.

Most retirees rely on Social Security. One in four gets 90% of their retirement income from the program. About half rely on it for 50% of their income.

Although Social Security is only one part of a secure retirement plan, it’s helpful to get a rough idea of how much you can expect. If you’re eligible for Social Security, your monthly benefit is based on two factors:

  • How much money you earned during your working career
  • The age you choose to start getting payments

Let’s look at how each of these affects your future Social Security income.

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How Much Social Security Will I Get In Retirement

The amount of your monthly Social Security retirement benefit depends on multiple factors, including how much you earn over your working life, how old you are when you retire and allowances for inflation. Understanding how the payment is calculated can help you estimate what to expect and better position yourself to plan for retirement. Here’s how it works.

Obtain An Estimate Online

The Best Age to Begin Collecting Social Security Retirement Benefits ...

This is the easiest way to get an estimate of your Social Security income. You will simply need to register for your personal my Social Security account at www.SSA.gov. Once you create your account, you will have access to a number of features including a retirement estimator. This benefit calculator allows you to estimate your retirement income, and it will even take into account your future earnings by making a few assumptions. You can simply adjust the numbers regarding your current salary and future wage increases, and the calculator will provide an estimate almost immediately. In addition to these calculators, you can also view your Social Security statement which shows your Social Security earnings history and other important information. To gain access, you will simply need to provide your Social Security number, date of birth, and a few other pieces of identifying information.

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Tool To Check Retirement Age

Your FRA depends on the year you were born, and it’s easy to check online.

The SSA’s retirement age calculator lets you to put in your birth year to quickly find out the exact age you will be eligible to claim the full benefit.

The tool also explains how much your benefits will be reduced by if you claim early, depending on the year and month.

Social Security Benefit Calculator

Social Security benefits can be an important factor to consider in your future retirement income. Use this calculator to estimate what your retirement benefit amount could be.

An Ameriprise advisor can look at your overall financial picture and provide personalized advice to help you meet your retirement income goals.

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How Your Benefit Amount Is Determined

Your average lifetime earnings, otherwise known as your Primary Insurance Amount , determine your Social Security benefits. As you can guess, calculating your PIA is complicated because some factors in the formula change annually. Its easiest to get that benefit estimate directly from the SSA, however, knowing how your PIA is calculated is useful in retirement planning. Currently, the two most frequently used PIA calculation methods are:

The simplified old-start benefit methodEvolved from the original 1939 Act formula, this method is used if, prior to 1979, you turned 62 years old, became disabled, or death occurred prior to 1979. It averages actual earnings and uses a table to calculate PIA.

The wage indexing methodIn use since 1979, this method indexes earnings to adjust them to reflect changes in wage levels throughout years of employment, ensuring that your benefits reflect increases in the standard of living. Through this method, your PIA is reached by indexing lifetime earnings up to and including the year you turn 59. Then, your PIA is calculated by averaging your highest earnings for a specific number of years and a benefit formula is applied.

Explore How The Age You Start Collecting Social Security Affects Your Retirement Benefits

How much your Social Security benefits will be if you make $30,000, $35,000 or $40,000

The calculator bases your benefit estimate on current formulas from the Social Security Administration. Your answers are anonymous. Because we do not access or use your Social Security earnings record, these are rough estimates.

Your estimated benefits:

Select claiming ages on the graph to see how your estimated benefit changes.

Claiming at age Age 67 is your full benefit claiming age.

Compared to claiming at your full benefit claiming age.

Social Security retirement benefits are not designed to be your sole source of retirement income, but waiting even one month will increase your benefits.

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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.

How Much Money Do You Need For Retirement

Arriving at an answer to this question may not be immediately obvious because it depends on several variables related to your retirement objectives. Do you envision your retirement lifestyle costing more or less than what you spend now? If you want to increase the amount of domestic or international travel you enjoy during retirement, you will likely need additional money for these adventures. However, if you want to move into a smaller house or condo to simplify your life after you retire, you may not need as much money on an annual basis as you do now.

It can be helpful to imagine what your expected expenses in retirement might be and develop a retirement budget to estimate the level of income you think you’ll need. Remember to include unexpected costs like taking care of elderly parents, special destination weddings, inflation and potential investment losses. After you have a rough estimate of your retirement budget, you can more accurately determine the percentage of income replacement at retirement, one of the assumptions in our Retirement Savings Calculator. Depending on your situation, a scaled-down lifestyle may need only 80% of your current income, whereas opening an antique store as a brand new business venture could bump that up to 150%.

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Can I Use The Calculator To Figure Out Social Security Disability Insurance And Supplemental Security Income

No. SSDI is aimed at people who cant work because they have a medical condition expected to last a year or more or result in death. Your SSDI benefits last only as long as you suffer from a significant medical impairment while not earning significant other income.

SSI is a separate program for people with little or no income or assets who are 65 or older, as well as for those of any age, including children, who are blind or who have disabilities. The maximum monthly SSI payment for 2022 is $841 for a single person and $1,261 for a couple. But some states add to that payment, and you may receive less than the maximum if you or your family has other income. Get more information about SSDI and SSI from the Social Security Administration.

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