Wednesday, June 15, 2022

How Can I Calculate What My Social Security Will Be

Don't Miss

Can You Receive Retroactive Payments

How to Calculate Your Social Security Benefits

Once the SSA approves your SSDI application and calculates your monthly benefit, you may be entitled to a back pay award. How many months of payments you will receive will depend on the date you applied for benefits and your disability onset date.

If you are applying for SSDI benefits, you need the assistance of a skilled Social Security disability lawyer to get your application approved and receive the benefits you deserve. To schedule a free consultation with a member of our legal team, fill out the online form on this page or call our Roswell office today.

Related Links:

How To Calculate Your Social Security Break

Deciding when to take Social Security retirement benefits is important because it can directly affect your benefit amount. While you can technically start taking benefits as early as 62, youd receive them at a reduced amount. On the other hand, you could delay taking benefits up to age 70. Calculating your Social Security break-even age can help you decide when the best time is to begin taking benefits. You can do that using a Social Security break-even calculator. Additionally, it may behoove you to consult with a financial advisor about when its best for your particular situation to begin receiving Social Security benefits.

How Does The Calculator Estimate My Retirement Benefits Payment

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 $1,332 a month by retiring at 62 the earliest to start collecting. The same person would get $1,911 by waiting until age 67, full retirement age. And he or she would get $2,370, 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: When Will People On Social Security Get Their Stimulus Checks

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 2021 is $794 for a single person and $1,191 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.

Also of Interest

Social Security Calculation Step 1: Adjust All Earnings For Inflation

How can I check my social security status?

So lets jump in with calculating your AIME. To do this, youll need to get use a notepad or a tool like Excel/Google Sheets.

Youre going to need six individual columns with plenty of room underneath for your information. Set up your columns with the following headings: Year, Age, Actual Earnings, Indexing Factor, Indexed Earnings, Highest 35 Years.;

The first two headings are the year and your age. Go all the way back to the first year you had earnings that were taxed for Social Security. You can find a complete record of this by going to your online SSA account and click the link that says view earnings record. If you dont have an online account, its very easy to set one up.

This may seem a little redundant to put the year and your age, but itll make another step a little easier.

Now you just need to copy down the information from the SS earnings history. Youll want to use the part that says your taxed Social Security earnings. Dont skip a year, even if there were no earnings. Just put a zero in.

Once you have all of your historical earnings recorded, its time to adjust them for inflation. The SSA uses an indexing factor to make sure your future benefit has kept up with inflation, but still based on your earnings.

Important note hereonly your earnings through age 59 are indexed. All earnings at age 60 and beyond are used in the calculation at face value with no inflation adjustment applied.

Recommended Reading: How Much Social Security Do You Get At Age 64

Highest Earnings Are Used

In the determination of the full monthly retirement benefits, the social security association uses the highest earnings. The case is different for people who have worked for less than the period of 35 years. Remember that the higher your earnings were or are, the higher the social security earnings you will get.;

State Taxes On Social Security Benefits

Everything weve discussed above is about your federal income taxes. Depending on where you live, you may also have to pay state income taxes.

There are 13 states that collect taxes on at least some Social Security income. Four of those states; follow the same taxation rules as the federal government. So if you live in one of those four states then you will pay the states regular income tax rates on all of your taxable benefits .

The other nine states also follow the federal rules but offer deductions or exemptions based on your age or income. So in those nine states, you likely wont pay tax on the full taxable amount.

The other 37 states do not tax Social Security income.

State Taxes on Social Security Benefits
Taxed According to Federal RulesMinnesota, North Dakota, Vermont, West Virginia
Partially TaxedColorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah
No State Tax on Social Security BenefitsAlabama, Alaska, Arizona, Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming

You May Like: What Do You Need To Apply For Social Security Benefits

Social Security Calculation Step 3: Primary Insurance Amount Calculation

Now youre ready to determine the heart of your benefit; your primary insurance amount . The PIA is simply the result of your benefit calculation and is generally your full retirement age benefit amount.

This is calculation is accomplished by using the bend point formula thats in effect for the year you attain age 62. If you arent 62 yet, youll need to forecast what the bend point formula amounts will be in the year you turn 62. These change annually based on the change in annual wages and generally increase at 3-4%.

There are two numbers that make up this formula which are separated into three separate bands: The amount up to the first number, the amount between the first and second number, and the amount above the second number.

  • For earnings that fall within the first band, you multiply by 90%. That is the first part of your benefit.
  • For earnings that fall within the second band, you multiply by 32%. That is the second part of your benefit.
  • For earnings that are greater than the maximum of the second band, you multiply by 15%. This is the third part of your benefit.
  • The sum of these three bands is your benefit amount at full retirement age: your PIA, or Full Retirement Age benefit amount.

    In the example image below we illustrate an individual with an AIME of $6,000 being applied to the bend point formula.

    When Will You Collect

    How To Calculate Social Security Benefits [3 Easy Steps]

    The SSA calculates your benefit amount at your full retirement age . This depends on the year you were born. FRA by birth year is:

    • 19431954: age 66
    • 1955: age 66 and two months
    • 1956: age 66 and four months
    • 1957: age 66 and six months
    • 1958: age 66 and eight months
    • 1959: age 66 and 10 months
    • 1960 and later: age 67

    The monthly amount you are eligible to receive at your FRA is considered your full benefit, but it is not your minimum or maximum benefit.

    You have the option to file for early retirement as early as age 62. But, you may choose to delay taking your benefits until as late as age 70.

    There are many reasons why you might choose to take early retirement or to delay it. That choice has a direct impact on the amount of your monthly payment. If you opt for early retirement, you are choosing a lower monthly payment for the rest of your life. By choosing to delay your benefit to any age between your FRA and age 70, you lock in an increase.

    You May Like: What Age Can I Sign Up For Social Security

    Social Security Calculation Step 4: Adjust For Filing Age

    The easy way to look at it is to think about it in annual numbers.

    Your benefit will be lower if you file at 62 and higher if you file at 70.

    If you file after your full retirement age, your benefit will increase by 8% per year. If you file in the 3 year window immediately prior to your full retirement age your benefit will decrease by 6.66% per year of early filing. For anything more than 3 years before your full retirement age, your benefit will decrease by an additional 5%.

    A lot of people dont want to retire on their birthday so its important to break this down by a monthly amount.

    Are You Eligible For Social Security

    To be eligible for Social Security benefits, you must earn at least 40 credits over your working career. How those credits are calculated is complex, but you will likely qualify if you have worked for at least 10 years.

    You may be entitled to a spousal benefit because of your partner’s work history. If your spouse, ex-spouse, or deceased spouse has earned 40 credits, you may qualify. The Social Security Administration provides more info about this option.

    But your work history is not only used as part of the qualification criteria; it is also used to figure out the amount of your payment. In calculating your monthly retirement benefit, the SSA considers your highest-earning 35 years of work history. If you worked for less than 35 years, the SSA will use zero for some years.

    The higher your earnings over those 35 years, the greater your contribution to the program through FICA taxes, and the higher your benefit will be.

    The same threshold applies to both your earnings and your benefits. This amount is $142,800 in 2021.

    Don’t Miss: Can You Get Disability If You Are On Social Security

    Spouses Survivors And Dependents

    Spouses, survivors and qualifying dependents can collect Social Security benefits based on the primary insured’s PIA.

    A spouse can claim 50% of the primary worker’s full PIA if they retire at the Normal Retirement Age or if they are caring for a qualified child. A spouse who is not caring for a qualified child and who retires after 62 but before their Normal Retirement Age will get reduced benefits down to a low of 32.5% of the primary worker’s benefit.

    A qualifying child can claim up to 50% of a retired worker’s benefits or, if they are a surviving child, up to 75% of a deceased worker’s benefits. However,;in cases where a family has multiple claimants , the combined family benefit is capped at between 150 – 180%;of the primary worker’s benefits.

    Finally, a surviving spouse who has reached their Normal Retirement Age can opt to collect their deceased spouse’s benefits instead of their own. In this case, they will receive 100% of the primary worker’s benefits. A younger widow/widower who is caring for a qualified child can collect 75% of the primary worker’s benefits.

    You can only collect under one benefits program. Any beneficiary who qualifies for multiple sources of income will receive the higher of their qualifying benefits.

    Tags

    Simplifying Your Social Security Taxes

    9 Facts About Social Security  Beirne Wealth Consulting ...

    During your working years, your employer probably withheld payroll taxes from your paycheck. If you make enough in retirement that you need to pay federal income tax, then you will also need to withhold taxes from your monthly income.

    To withhold taxes from your Social Security benefits, you will need to fill out Form W-4V . The form only has only seven lines. You will need to enter your personal information and then choose how much to withhold from your benefits. The only withholding options are 7%, 10%, 12% or 22% of your monthly benefit. After you fill out the form, mail it to your closest Social Security Administration office or drop it off in person.

    If you prefer to pay more exact withholding payments, you can choose to file estimated tax payments instead of having the SSA withhold taxes. Estimated payments are tax payments that you make each quarter on income that an employer is not required to withhold tax from. So if you ever earned income from self-employment, you may already be familiar with estimated payments.

    In general, its easier for retirees to have the SSA withhold taxes. Estimated taxes are a bit more complicated and will simply require you to do more work throughout the year. However, you should make the decision based on your personal situation. At any time you can also switch strategies by asking the the SSA to stop withholding taxes.

    Read Also: How Can I Lock My Social Security Number

    Tips For Saving On Taxes In Retirement

    • A financial advisor;can help you align your tax strategy to maximize your retirement income.;SmartAssets free tool;matches you with financial advisors in your area in 5 minutes. If youre ready to be matched with local advisors who can help you achieve your financial goals,;get started now.
    • What you pay in taxes during your retirement will depend on how retirement friendly your state is. So if you want to decrease tax bite, consider moving to a state with fewer taxes that affect retirees.
    • Another way to save in retirement is to downsize your home. Moving into a smaller home could lower your property taxes and it could also lower your other housing costs.

    Synopsys Primesim Reliability Analysis Solution Accelerates Design Of Hyper

    • 8 minutes ago

    That’s it. Non-citizens, felons, and spouses who didn’t work can all qualify for Social Security as long as they meet those three requirements. The third is a rare category but, for example, it would disqualify someone from getting survivor’s benefits after killing their spouse or someone who gained their work credits fraudulently.

    The third category also means those undocumented immigrants, even though many pay Social Security taxes, cannot collect benefits unless they are considered a “qualified alien.”

    Read Also: Should You Give Someone Your Social Security Number

    Earn Ssa Work Credits In Some Countries

    You may not have enough credits from your work in the United States to qualify for retirement benefits. But, you may be able to count your work credits from another country. The SSA has agreements with 24 countries. If you earned credits in one of those countries, they can help you qualify for U.S. benefits.

    Can Your Pia Change After You Reach Age 62

    Video: How To Calculate Social Security Benefits

    There are two things that affect your PIA after you reach age 62:

  • Higher earnings: Earnings in years between age 62 and 70 that are higher than one of the 35 highest earnings years previously used in the formula will change your AIME which is used in the PIA formula.
  • Inflation: Your PIA will be adjusted by the same cost-of-living adjustments applied to people who are already receiving Social Security benefits. You can see;historical cost-of-living adjustment rates;on the Social Security Administration’s website.
  • You may get the wrong answer when running your own calculations on when to begin Social Security if you simply take the numbers off your statement and do not properly apply inflation adjustments.

    Also Check: Can You Get Ssdi And Social Security

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

    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.

    More articles

    Popular Articles