Nearly all Americans 65 and older get at least some money from Social Security, and more than one-third say it provides at least half their monthly income. Some seniors have no other funds to fall back on and rely upon Social Security to cover virtually all their expenses.
Many don’t realize the program wasn’t designed to be a beneficiary’s sole means of support in retirement. It was only intended to cover about 40% of pre-retirement earnings for the average worker. But some people get more than this, and others get less. Fortunately, estimating how much you’ll get isn’t too complicated.
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How the Social Security Administration calculates your benefit
The Social Security Administration (SSA) relies upon three key factors when calculating your checks. The first is the number of years you’ve worked. The benefit formula looks at your income over your 35 highest-earning years. If you have worked longer than this, the government ignores your lowest-earning years. If you worked fewer than 35 years, it adds zero-income years to your benefit calculation.
The next factor the government looks at is how much you made during your highest-earning years. Generally, it considers all your income, though this might not be true for high earners.
You only pay Social Security payroll taxes on the first $168,600 in 2024, so only this amount counts toward your future benefit checks. In prior years, this ceiling was lower. As long as you don’t exceed this income threshold, anything you do to increase your income today leads to larger Social Security checks in the future.
The last factor is your age when you sign up for the program. You must wait until your full retirement age (FRA) if you want the full benefit your work history has earned you. FRA is anywhere from 66 to 67, depending on your birth year.
Claiming before reaching this age could reduce your benefit by up to 30%, while delaying past your FRA can increase your checks by as much as 32%. Delaying Social Security isn’t always the best move. Those who don’t expect to live long and those who have no other means of paying their bills often choose to sign up earlier.
Each of the three factors that influence your benefit is unique to you, which can make it challenging to estimate how much you’ll get from the program. Fortunately, the SSA has a tool to make this pretty simple.
How to know how much you’ll get from Social Security
There’s no need to break out the calculator to estimate your monthly Social Security checks; it’s much easier to create a my Social Security account. The first time you do this, you’ll need to answer some identity verification questions to prove you are who you say you are, but next time, all you will need is a username and password.
Once you’re in, you’ll be able to view your earnings history, which shows how much income you’ve paid Social Security taxes on each year. There’s also a calculator tool that estimates your benefit checks at every claiming age from 62 to 70.
This calculator is great for estimating your benefits, but it can’t predict the future. It assumes that your earnings will remain more or less the same as they are today, but this might not be true. You can change your income estimate, though, to see how a raise or a job change might affect your future checks.
Use the calculator to help determine the best claiming age for you. Choose a few claiming ages you’re considering and note their monthly amounts. Multiply each of these by 12 to get your estimated annual benefits. Then, multiply each of these figures by the number of years you expect to claim. For example, a $2,000 monthly benefit claimed for 20 years gives you a lifetime benefit of $480,000.
Whenever possible, wait to claim until the age that will give you the most money overall unless health or financial issues prohibit you from doing so. This often means delaying Social Security until you qualify for your maximum benefit at 70.
All of these estimates assume the Social Security benefit formula remains the same over time. Changes are possible, though. If the government alters the program in the future, you might need to revisit these calculations to get a more accurate estimate of how much you’ll receive.
