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How To Figure Out My Social Security Payment

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4 Simple Steps to Calculating Your Social Security Benefit: Educator Edition

People can apply up to four months before they want their Social Security retirement benefits to start. When theyre ready to apply for retirement benefits, they can use the online retirement application at SSA.gov.

In Michigan, there were nearly 1.54 million people receiving Social Security retirement benefits as of December 2020, the most recent information available.

Michigan’s state population as of April 1, 2020, was at 10,077,331 people.

So nearly 15% of the population receives Social Security retirement benefits.

Laurence Kotlikoff, professor of economics at Boston University, said he’s quite concerned that inflation will continue to be higher in the years ahead.

If inflation continues, he said, many people are better off waiting to take Social Security past age 62 so that they ensure a larger share of their old age income is inflation-protected.

“Inflation should make you more prone to being patient when taking Social Security,” said Kotlikoff, who is president of Economic Security Planning, which offers an online tool called “Maximize My Social Security” for $40 a year for individuals.

Kotlikoff said even without the concerns of inflation, waiting to take Social Security closer to age 70 is the “best move by a mile for roughly three quarters of households.”

He said the the inflation-adjusted benefit at 70 is 76% higher than at age 62.

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.

This Is The Average Social Security Benefit In 2022

In 2022, the average benefit that seniors will receive is $1,657 among all retired workers. This is up $92 from the average benefit of $1,565 at FRA in 2021. The average benefit is going up because retirees are getting a 5.9% cost of living adjustment .

COLAs are awarded in most — but not all — years in order to help benefits maintain their buying power. Since prices rise each year, Social Security benefits would purchase much less over time without COLAs. That’s why prices on a consumer price index called CPI-W are compared each year. If CPI-W shows a year-over-year increase, retirees see more money in their Social Security checks starting in January.

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When Will You Collect

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.

How To Correct An Error On Your Social Security Statement

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

If you have evidence of your covered earnings in the year or years for which you think Social Security has made an error, call Social Security’s helpline at 800-772-1213, Monday through Friday, from 7 a.m. to 7 p.m. This is the line that takes all kinds of Social Security questions, and it is often swamped, so be patient. It is best to call early in the morning or late in the afternoon, late in the week, or late in the month. Have all your documents handy when you speak with a representative.

If you would rather speak with someone in person, call your local Social Security office and make an appointment to see someone there, or drop into the office during regular business hours. If you drop in, be prepared to wait, perhaps as long as an hour or two, before you get to see a representative. Bring with you two copies of your benefits statement and the evidence that supports your claim of higher income. That way, you can leave one copy with the Social Security worker. Write down the name of the person with whom you speak so that you can reach the same person when you follow up.

The process to correct errors is slow. It may take several months to have the changes made in your record. After Social Security confirms that it has corrected your record, request another benefits statement to make sure the correct information made it to your file.

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When I Retire I Will Have 40 Credits Under Social Security Will My Social Security Pension Be Reduced Because I Will Receive A Pension From The Mtrs

If you have 40 credits under the Social Security system , then Social Security will use a modified formula to calculate your pension unless:

  • you had 20 years of creditable service under the MTRS before January 1, 1986 or
  • you were age 55 and had at least 10 years of creditable service before January 1, 1986 or
  • you will have at least 30 years of substantial earnings under the Social Security system. For further information on substantial earnings, contact your local Social Security Administration Office or see more information on the Windfall Elimination Provision below.

If you do not meet any of these requirements, you will receive a reduced Social Security pension. In order to determine the amount of the reduction that applies to you, please contact the Social Security Administration at 800-772-1213.

Understanding The Social Security Benefits Formula Is Important

Understanding the Social Security benefit formula is important, because you can shape your behavior to increase your benefits once you know the formula.

Throughout your career, you can work to increase your income so you have a higher average wage. If you have not worked for a full 35 years, you may also decide to work longer so you don’t have any years of $0 wages factored in or so you have fewer $0s figured in your average. Or, if you are earning a much higher wage at the end of your career, you could stay in the workforce longer so some years of higher wages replace years of lower earnings. Finally, you could opt not to claim benefits until at least full retirement age or later so you get at least your primary insurance amount — or more.

Since Social Security is such an important source of income in retirement, it’s worth learning how the Social Security benefits formula works and taking steps to maximize the benefits that will help support you as a senior.

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How Will Your Social Security Benefits Compare To The 2022 Average

    Social Security benefits are an important source of income for most older Americans. And, the good news is, the typical senior will see a little more money next year with the average retirement benefit rising.

    If you’re collecting Social Security, your benefits will be going up. Wondering how much your increase will be — and how it will compare to the average benefit your peers will receive? Here’s what you need to know.

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    Other Benefits Will Be Delayed If You Delay Your Old Age Security Payment

    If you are not in receipt of the Old Age Security pension:

    • you cannot get the Guaranteed Income Supplement
    • your spouse cannot apply for the Allowance

    Note: The Guaranteed Income Supplement and Allowance amounts dont increase when you delay receiving Old Age Security pension payments. You cannot receive the Guaranteed Income Supplement and your partner cannot receive the Allowance when you are not receiving the Old Age Security pension.

    When monthly increases are not applied

    If you decide to delay receiving the Old Age Security pension, you will not receive monthly increases during any month where you are:

    • in federal prison as a result of a sentence of 2 years or longer
    • outside Canada, have less than 20 years of residence in Canada and do not qualify under an international social security agreement

    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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    How Your Primary Insurance Amount Is Calculated

    Once you have your AIME, you can calculate your primary insurance amount , the base rate for your Social Security payments. The PIA calculation relies on so-called bend points that determine how much of your income will be replaced by Social Security benefits in retirement.

    Think of bend points as similar to tax brackets, in that they determine a percentage of your benefits based on incremental buckets of earnings. There are three bend point buckets: one for 90% of income replacement, one for 32% and one for 15%.

    These bend point buckets help give lower lifetime earners a higher percentage of income replacement, and higher lifetime earners a lower rate of income replacement, says Jim Blankenship, certified financial planner and author of A Social Security Owners Manual.

    The dollar amounts of bend points are adjusted for inflation each year, but the percentages of each bend point are set by law and remain unchanged. AIME amounts are always rounded down to the nearest $0.10. For 2021, the bend points are:

    90% of the first $996 of your AIME, plus

    32% of your AIME between $996 and $6,002, plus

    15% of your AIME over $6,002

    For a worker with an AIME of $6,250, the calculation would look like this:

    90% of $966 = $896.40, plus

    32% of $5,006 = $1,601.92, rounded down to $1,601.90, plus

    15% of $248 = $37.20

    This worker would earn a monthly Social Security benefit of $2,535.50 .

    How Your Ssdi Payments Are Calculated

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    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.

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    How Will Social Security Come Up With My Check Amount

    The Social Security Administration takes the 35 top-earning years of your career in calculating an average monthly earnings amount. The calculation method takes inflation into account, boosting the inflation-indexed value of the pay you received early in your career.

    If you’ve consistently made $40,000 throughout your career, then your benefits will be higher than if you’ve had to claw your way up from lower levels. That’s different from how some private pensions work, where even a single year of strong earnings can dramatically boost what you receive in retirement.

    Myth #: You Can Claim Early Then Get A Bump Up Once You Reach Full Retirement Age

    Many believe there is a “bump up” or “added income” once they reach their FRA. They’ve heard they can claim early at 62, then when they reach 66 or older, their checks will increase to the amount that corresponds to their FRA benefit. That’s a big misperception.

    There’s no bumping up of income once you’ve claimed your Social Security retirement benefit. However, anyone receiving a benefit can voluntarily “suspend” that benefit after they reach FRA and resume it as late as age 70. If they do, the annual benefit will increase by 8% per year of delay up until age 70. After that, you get an annual cost of living adjustment, but no increase in your base benefit, which will start automatically the month you reach age 70 unless you specify otherwise.

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    In general, you can cancel your Social Security claim if you do so within the first 12 months of receiving benefits.2 You must repay the full amount you’ve received, and the full amount a current spouse or family member received based on your benefit. Then, you’re eligible to claim again at a later date and will receive a larger monthly payment. Each individual can only cancel a claim once in their lifetime.

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    Adjust Your Primary Insurance Amount If You Claim Benefits Before Or After Full Retirement Age

    All the above calculations determine the primary insurance amount if you claim benefits at full retirement age — but you may decide to claim benefits before or after FRA. You can claim benefits as early as age 62. But if you claim benefits before FRA, your benefits are decreased by:

    • 5/9 of 1% per month for each month prior to FRA for the first 36 months
    • 5/12 of 1% per month for each additional month if you claim more than 36 months before FRA

    If you claim benefits after FRA, benefits are increased by 2/3 of 1% for each month you wait up until age 70.

    The table below shows FRA depending on your birth year:

    If You Were Born inYour FRA Is

    Table source: Social Security Administration.

    Depending when your FRA is, you’d apply the benefits reduction or increase to your primary insurance amount. For example:

    • If FRA is 67 and you claim benefits at 66, that’s 12 months early. Multiply the per month-reduction *.01) times 12 months to see that benefits are reduced by around 6.7%.
    • If FRA is 66 and you claim benefits at 62, that’s 48 months early. Multiply the per month-reduction for the first 36-months *.01) times 36 months + the additional reduction of *.01) times 12 months. This gives you 0.20 + 0.05, which amounts to a 25% reduction in your primary insurance amount.
    • If FRA is 67 and you claim benefits at 69, that’s 24 months late. Multiply the per-month increase *.01) times 24 months to see benefits are increased by 16%.

    Congress Must Act Sooner Rather Than Later

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    In theory, the AWI problem could be fixed anytime before 2022, when, for example, workers who turn 60 this year are first eligible to retire at the age of 62. But that delay would cause significant anxiety for these workers, whose future benefits would be at risk. Moreover, people decide when to retire based on projections of their incomes in their initial year of retirement and in the remainder of their lives. It would be most unfair to workers decision-making processes to have the expectations of their future incomes be uncertain for some period of time while they are trying to make such an important decision.

    Congress needs to act sooner rather than later to ameliorate this problem. One possibility would be to include a fix in the stimulus legislation to cope with the economic effects of the COVID-19 pandemic that Congress is currently considering.

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    What Is The Social Security Benefits Formula

    The Social Security benefits formula is a formula used to determine your primary insurance amount, or the amount of money you’d be entitled to if you claimed benefits at the age designated by law as your full retirement age. If you claim benefits before full retirement age — aged 65 to 67 depending, when you were born — you’ll receive a smaller benefit than the primary insurance amount. If you claim benefits after, you will receive a larger benefit.

    The Social Security benefits formula used to determine your primary insurance amount is:

    • 90% of average indexed monthly earnings up to a first bend point. Bend points are income limits set each year based on changes to the Average Wage Index, which is a measure of wage trends.
    • 32% of AIME between a first and second bend point
    • 15% of AIME above the second bend point

    AIME is calculated by taking wages earned over your career and adjusting for inflation using the Average Wage Index. The Social Security Administration adds up inflation-adjusted wages for the 35 years you earned the most, divides by 35 to get your average annual wage, then divides by 12 to get your average monthly wage. This is the AIME used in the formula.

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