Thursday, September 29, 2022

How Much You Will Get From Social Security

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Brief History Of Social Security

How Much Money Will You Get From Social Security?

The Social Security program was created by the Social Security Act that President Franklin D. Roosevelt signed into law in 1935. The first checks went out in 1940. Originally it paid benefits only to workers 65 and older, but in the 1970s the government altered it to allow workers to claim benefits as early as 62. It also instituted annual cost-of-living adjustments to help Social Security keep pace with inflation.

The program has worked fairly well so far, but many people fear for the future, when there will be fewer workers to support a greater number of Social Security recipients. The latest Social Security Trustees’ Report indicates the program’s trust funds would be depleted by 2035, after which it would be able to pay out only about 76% of benefits to retirees and about 92% to disabled workers.

The government has proposed several possible solutions for ensuring the long-term sustainability of the program, but at present no plans have been set. There’s no risk of the program disappearing in the next decade or two, but it’s possible future benefits may not go as far as they do today. That’s why today’s workers need to prioritize their personal retirement savings, so they can cover most of their expenses on their own.

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Here’s How To Estimate Your Social Security Benefit From Your Salary

Fortune tellers use crystal balls, tea leaves, and tarot cards to see the future. Thankfully, you don’t have to resort to psychic tools and mystical arts to predict your Social Security benefit. The Social Security Administration opts for a more concrete approach, in the form of online calculators and other estimators.

In 2020, the average Social Security benefit is $1,503 monthly and the maximum benefit is $3,790. A six-figure salary translates into a benefit that’s between those two numbers — but where the benefit lands, exactly, is influenced by other factors beyond your current income. Your income in prior years, your age today, and the timing of your benefits claim are also important. If you’re willing to make some assumptions, it is possible to estimate your future monthly Social Security benefit.

No : Collect A Spousal Benefit

If you’re married and your spouse has a richer work history than you do, you may be able to collect a “spousal benefit,” based on your spouse’s earnings instead of your own. Spouses can collect benefits worth up to 50% of their other half’s benefits. This can be particularly welcome for spouses who never worked, or earned very little.

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How To Get A Social Security Card

  • Gather your documents. Learn what documents you’ll need to get a card. Select your situation:
  • Adult or child
  • Original, replacement, or corrected card
  • U.S. born citizen, foreign born U.S. citizen, or noncitizen
  • Apply online for a replacement card. Apply online if youre not changing anything on your card and you are eligible. This option is available in most states. You will need to make a my Social Security account first. Or complete an application. If you can not apply online, fill out an application and return it to the SSA. Find out where to take it in person or mail it.
  • No : Look Into Survivor And Disability Benefits

    How Much Will I Get From Social Security If I Make ...

    You may be able to get more money from Social Security than you thought if you’ve been widowed or are disabled or related closely to someone disabled. That’s because Social Security offers survivor and disability benefits and even retirement benefits for dependents of retirees in some cases. If your spouse passes away, you may be able to claim survivor benefits and your children may receive them, too, through age 17. Social Security offers disability benefits, also, to people of all ages who qualify.

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    No : Start Collecting Early At 62

    If you live an average lifespan, though, you won’t come out ahead much by delaying, because you’ll get fewer checks, in total, than those who started earlier with smaller checks. If you live much longer than average, though, waiting will have been worth it. But if you have reason to believe you will live a shorter-than-average life, or you simply need the money, go ahead and start collecting early. For most people, that’s a perfectly reasonable thing to do.

    How To Calculate Social Security Benefits

    If youd just like a ballpark estimate of your benefit, the Social Security Administration offers a quick calculator to give you a sense of your potential benefit. This calculator simply asks for your current annual salary, your birth date and your projected retirement date, although it does allow you to fill in your actual income by year to get a more accurate estimate.

    This estimate does not take early or late application for benefits, taxes and Medicare, or COLA increases into account. Youll likely need to download the Social Security Administrations full calculator software or work with a financial advisor to determine your full benefits considering those factors.

    Knowing how much you can expect to receive in Social Security gives you an important piece of your retirement income puzzle. With that in hand, you can make the financial plans you need for a secure and fulfilling retirement.

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    Income Earned During The Year You Reach Fra

    During the year you reach FRA, and up to the month you reach FRA, Social Security will deduct $1 for every $3 you earn that is over the annual earnings limit. For the year in which you will reach FRA, the earnings limit is different.

    In 2020, the earnings limit is $48,600, which means that you can earn up to $46,600 before having any pay deducted. The limit is $50,520 for those reaching FRA in 2021. During the year in which you reach FRA, Social Security only counts earnings that you receive before the month you reach FRA.

    For example, lets assume you were born in 1954, which means your FRA is age 66. You turned 66 in June 2020 and began your Social Security benefits at that time. You earned $44,000 from January through May of 2020. Your benefits will not be reduced, because you earned less than $48,600 during the months before you attained full retirement age.

    The Social Security Administration website provides additional examples of how this deduction works. You can also use the earnings test calculator and plug in your date of birth and expected earnings to see whether you think a reduction will apply to you.

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    Make Payments To The Federal Government

    How much money will I receive from Social Security Disability Benefits?

    Learn how to use Pay.gov to make secure, electronic payments to government agencies from your checking or savings account. You can use the online service for VA medical care copayments, U.S. district court tickets, U.S. Coast Guard merchant mariner user fee payments, and more.

    If you need help, contact Pay.gov customer service.

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    Beginning Benefits Before Fra

    If you choose to begin to receive benefits before you reach your full retirement age, one or both of the following calculations will apply:

    • 5/9 of 1%: Your benefits are reduced by 5/9 of 1% per month, up to a maximum of 36 months, depending on how many months you have until you reach FRA.
    • 5/12 of 1%: If you are more than 36 months away from reaching FRA, the reduction above is applied, and then for the number of months greater than 36, the benefit is further reduced 5/12 of 1% per month.

    Therefore, if your FRA is age 66, your benefits would be reduced by 25% if you begin taking them at age 62. Find that figure by taking 5/9 of 1%, or 0.56 multiply by 36 months to get 20%. Then, 5/12, or 0.42, multiplied by the remaining 12 months, is 5% for a total of 25%.

    Baby Boomers: On Target

    Social Security benefit estimates for those born 1946 through 1964 should be on target and will be unlikely to be reduced if Congress fails to put a solution in place to shore up the reserve account within the overall trust fund, or fails to increase payroll taxes to support the commitments made to these retirees, says Mantell.

    Elsasser agrees but suggest taking some precautionary measures. Baby boomers should plan for benefits as they are projected, but stress test for a benefit cut, he says. Historically benefit cuts have been phased in over time.

    For instance, the last solvency crisis of this magnitude occurred in 1983. And some of the reforms that were put in place are still being phased in today, such as the increase in full retirement age from 65 to 67, Elsasser notes.

    According to Elsasser, stress testing allows you to practice what you would change in your plan if the full cut materializes. If the cuts to your plan are too painful to bear if they do materialize, then make smaller changes now and monitor the situation, he says. Smaller cuts to your lifestyle sooner will hurt less than larger ones later.

    Covisum has a benefit cut calculator that allows consumers to identify how benefit cuts would impact their break-even ages.

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    Social Security: 10 Smart Ways To Get More Benefits

    Without Social Security benefits, 22 million Americans would be poor per a report from the Center on Budget and Policy Priorities. About 21% of married elderly beneficiaries and 44% of unmarried ones get fully 90% or more of their income from Social Security, while about 48% of married elderly beneficiaries and 69% of unmarried ones get 50% or more of their income from it, according to the Social Security Administration.

    How much money are we talking about? Well, the average Social Security retirement check was recently $1,417, or about $17,000 annually. If that doesn’t seem like much, know that there are ways to increase your benefits. Here are 10 strategies to consider:

  • Check your record
  • Work for at least 35 years
  • Earn more
  • Delay starting to collect your benefits
  • Start collecting early, at 62
  • Collect a spousal benefit
  • Don’t earn too much if you’re working in retirement
  • Delay your divorce
  • Look into survivor and disability benefits
  • Strategize
  • Let’s examine each in more detail.

    What To Do: Check Your Social Security Statement While Working

    How Much Social Security Will You Get?

    To avoid losing money due to errors in your earnings record, check your statement annually. If you notice errors, gather proof of your earnings to send to the Social Security Administration, such as your W-2 or pay stubs. Once the Social Security Administration has verified your claim, it will correct your record.

    Its much easier to prove an error that happened the previous year, when you still have your records handy, than it is for 10, 20 or more years ago because you probably dont have a paper trail going back that far.

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    Claiming Social Security Benefits At The Right Time Means More Money In Your Pocket Here’s A Guide To Everything From Knowing Your Full Retirement Age To Taking Social Security Spousal Benefits

    For many Americans, Social Security benefits are the bedrock of retirement income. Maximizing that stream of income is critical to funding your retirement dreams.

    The rules for claiming Social Security benefits can be complex, but this guide will help you wade through the details. By educating yourself about Social Security, you can ensure that you claim the maximum amount to which you are entitled.

    Here are 12 essential details you need to know.

    How To Stop Social Security Check Payments

    The SSA can not pay benefits for the month of a recipients death. That means if the person died in July, the check received in August must be returned. Find out how to return a check to the SSA.

    If the payment is by direct deposit, notify the financial institution as soon as possible so it can return any payments received after death. For more about the requirement to return benefits for the month of a beneficiarys death, see the top of page 11 of this SSA publication.

    Family members may be eligible for Social Security survivors benefits when a person getting benefits dies. Visit the SSA’s Survivors Benefits page to learn more.

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    What If I Take Benefits Early

    If you choose to receive your Social Security check up to 36 months before your full retirement age, be aware that your benefit is permanently reduced by five-ninths of 1% for each month.

    If you start more than 36 months before your full retirement age, the benefit is further reduced by five-twelfths of 1% per month, for the rest of retirement.

    For example, lets assume that you stop working at age 62. If your full retirement age is 66 and you elect to start benefits at age 62, the reduced benefit calculation is based on 48 months. This means that the reduction for the first 36 months is 20% and 5% for the remaining 12 months. Overall, your benefits would be permanently reduced by 25%.

    What Can Affect The New Benefits Amount

    Hereâs How Much Money Youâll Get From Social Security

    If you are covered by Medicare Part B this will offset the increase.

    Medicare has not announced official rates for 2022, but it’s estimated that monthly premiums will increase by about $10 to $158.50 per month for the plan.

    Also, people with incomes above certain levels will pay more for Medicare Part B coverage. This is known as the Income-Related Monthly Adjustment Amount.

    New benefit amounts for 2022 will not be calculated for people covered by Medicare until after the premiums for next year are released.

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    How Your Ssdi Payments Are Calculated

    The severity of your disability will not affect the amount of SSDI benefits you receive. The Social Security Administration will determine your payment based on your lifetime average earnings before you became disabled. Your benefit amount will be calculated using your covered earnings. These are your earnings at jobs where your employer took money out of your wages for Social Security or FICA.

    Your SSDI monthly benefit will be based on your average covered earnings over a period of time, which is referred to as your average indexed monthly earnings . The SSA uses these amounts in a formula to determine your primary insurance amount . This is the basic amount used to establish your benefit.

    SSDI payments range on average between $800 and $1,800 per month. The maximum benefit you could receive in 2020 is $3,011 per month. The SSA has an online benefits calculator that you can use to obtain an estimate of your monthly benefits.

    How Much Money Can I Make Before Social Security Will Reduce My Benefits

    It depends on your age. If you have not yet reached full retirement age, then you can only earn $18,960. If you make more than that, then your benefits will be reduced. That limit increases to $50,520 the year in which you reach full retirement age. Suppose you reach normal retirement age in September. Then from January to September, the higher limit will apply. Upon actually reaching normal retirement age, the limit is removed altogether. This means that you can earn an unlimited income with no effect on your benefits. This age is anywhere from 65 to 67 depending on the year in which you were born.

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    How Deep Might The Cuts Be

    The current estimate is for a reduction of about $1 for every $4 or so in benefits starting in 2033. “At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 76% of scheduled benefits,” the trustees said.

    Another way to look at it is by examining how much of a typical retiree’s income will be paid or replaced by Social Security benefits. Pensions, personal savings, perhaps housing equity and other assets make up the rest.

    Lower-income people who are more dependent on the program could get hurt worse. On average, they currently rely on Social Security to replace about 56% of what their preretirement income was. That might fall to around 44% with across-the-board cuts, according to a Congressional Research Service analysis. Higher-income earners rely on Social Security to replace 35% of income, and that might fall to around 27%.

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    How Much Social Security Will I Get A Step

    How Much Social Security Will You Get?

    Whether youre eligible for full Social Security benefits at 66 or 67, it can help to know how much of a payout you can expect. Heres how to calculate the amount.

    • You need to work for at least 10 years in order to qualify for Social Security.
    • Your Social Security benefit will be based on your 35 highest earning years.
    • Your benefits may be reduced or increased depending on when you start taking them.

    Youve worked hard all your life, and now its time to retire. But even if you plan to continue working, you may be able to start collecting Social Security to supplement that income.

    Before you can make those decisions, though, you need to know how much money you can expect to collect. You can get that information through the Social Security Administration website, but until its time for benefits to be issued, it serves as only an estimate. By making those calculations yourself, youll be better able to see how your decisions today affect your future benefits. Using the steps below, youll be able to create a Social Security calculator that will give you a more accurate picture of the monthly dollar amount you can expect to receive.

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