Wednesday, September 28, 2022

How To Find Social Security Estimated Benefits

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How Credits Are Earned

How to Estimate Social Security Benefits

Since 1978, when you work and pay Social Security taxes, you earn up to a maximum of four credits per year.

The amount of earnings it takes to earn a credit may change each year. In 2021, you earn one Social Security or Medicare credit for every $1,470 in covered earnings each year. You must earn $5,880 to get the maximum four credits for the year.

During your lifetime, you might earn more credits than the minimum number you need to be eligible for benefits. These extra credits do not increase your benefit amount. The average of your earnings over your working years, not the total number of credits you earn, determines how much your monthly payment will be when you receive benefits.

Read our publication, “How You Earn Credits,” for more information.

Review Your Earnings History

While you are still logged into your account, look for the link to your earnings history. Click on it to see a full list of your wage income, dating back to your earliest days of working. Your Social Security benefit is calculated from these numbers. If some of your income is missing or incorrect, your benefit estimate may also be wrong.

Review your earnings history alongside your tax returns, paying particular attention to the years you earned the most. The Social Security formula only considers your highest-paid 35 years of working, so any issues in your lower-wage years may not be relevant.

If you see any mistakes, gather up W-2 forms, pay stubs, or tax returns showing your correct wages. You’ll have to call the Social Security Administration, explain the problems you see, and present your documentation to get your earnings statement corrected.

Number Of Credits Needed For Survivors Benefits

The number of credits needed for family members to be eligible for survivors benefits depends on your age when you die. The younger you are, the fewer credits needed. Nobody needs more than 40 credits.

Under a special rule, we can pay benefits to your children and your spouse caring for your children, even if your record doesn’t have the number of credits needed. They can get benefits if you have credits for one and one-half year’s work in the three years before your death.

If you are already receiving retirement or disability benefits at the time of your death, we will pay your survivors based on that entitlement. We will not have to determine your credits again.

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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

How To Receive Federal Benefits

Social Security Estimator Estimated Benefits

To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.

If You Have a Bank or Credit Union Account:

  • Call the Go Direct Helpline at .

If You Don’t have a Bank or Credit Union Account:

Make Changes to an Existing Direct Deposit Account:

Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.

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Costs Of Living Adjustment

The COLA is an annual adjustment to your Social Security benefits based on inflation. It changes each year based on the Consumer Price Index for Urban Workers and Clerical Workers . For workers who do not retire at their earliest retirement age, it is applied cumulatively to the PIA.

For example, the COLA in 2018 was set at 2%. If the worker from our example above chooses not to retire at 62, his PIA will still be adjusted upward to a resulting PIA of 2,339.40.

Do You Expect To Live A Long Life

Many people live longer than they expect.

Because Social Security provides guaranteed income for life, it’s especially valuable to you when you reach age 80 and beyond. Claiming benefits at your full Social Security benefit age or later could be a good way to secure your monthly income during your later years. Your benefit increases the longer you wait to claim, up to age 70, and is adjusted annually with the cost of living. If you live into your 80s but claim at age 62 instead of your full retirement age or later, your total lifetime benefits will be lower by thousands of dollars.Calculate your expected longevity.

Claiming at your full benefit age could still make sense for you.

We understand it’s difficult to make predictions. You may want to plan for the possibility that you may spend 20 or more years in retirement. On average, a woman reaching age 65 today will live to age 87, and a man will live to age 84. Waiting to claim as long as you can could still make sense for you if you are married, are the higher earner in the household, and want your surviving spouse to keep the highest monthly benefit after you die. Remember, you can claim at any point between age 62 and 70. Each additional month that you wait to claim gives you a permanent increase in your monthly benefit which becomes more valuable as you age.Calculate your longevity.

There’s a good chance that you’ll live into your 80s and beyond.

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Your Options: Working Applying For Retirement Benefits Or Both

Choosing when to start receiving your Social Security retirement benefits is an important decision. Theres no one choice that works for everyone because your lifestyle, finances, and goals are not the same as others.

Do you want to retire early, stay on the job, or work beyond retirement age?

Should you start receiving retirement benefits now, or wait until you can receive a higher benefit amount?

These are important questions youll need to answer as you plan for your retirement. Consider the four options below to help you make the best decision.

Continue Working

Should You Wait To Start Collecting Old Age Security

Fisher Investments Explains How to Estimate Your Social Security Benefit

You can receive your first Old Age Security pension payment the month after you turn 65.

You can receive a higher amount for each month you decide to delay your first payment.

You can delay payment of the Old Age Security pension for up to 60 months after you are 65. The longer you delay, the larger your pension payment will be each month.

After age 70, there is no advantage in delaying your first payment. In fact, you risk losing benefits. If you are over the age of 70 and are not receiving an Old Age Security pension, apply now.

If you are eligible for the Guaranteed Income Supplement, there is also no advantage in delaying your first payment.

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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%.

Maximizing Your Monthly Checks

Several factors affect how much you receive in benefits each month: how many years you’ve worked, your earnings during those years, and the age you begin claiming benefits.

To calculate your benefit amount, the SSA takes an average of your income over the 35 highest-earning years of your career, then adjusts it for inflation. If you haven’t worked a full 35 years before you begin claiming benefits, you’ll have zeros added to your earnings average to account for the time you weren’t working, which will lower your benefit amount.

So if you want to earn as much as possible in benefits, you should work at least 35 years. Increasing your income can also result in larger monthly checks because the more you earn each year, the higher your earnings average will be.

Finally, the age you begin claiming has a significant impact on how much you collect each month in benefits. When you check your statements online, your estimated benefit amount is the amount you’ll collect if you begin claiming at your full retirement age — which is either age 66, 66 and a certain number of months, or 67, depending on the year you were born.

If you claim before your FRA , your benefits will be reduced by up to 30%. On the other hand, if you wait until after your FRA to begin claiming , you’ll receive your full benefit amount plus up to 32% extra each month.

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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.

Getting A Social Security Number For A New Baby

Social Security Benefits â The Kid Picked Last for Dodgeball

The easiest way to get a Social Security number for your child is at the hospital after they are born when you apply for your childs birth certificate. If you wait to apply for a number at a Social Security office, there may be delays while SSA verifies your childs birth certificate.

Your child will need their own Social Security number so you can:

  • Claim your child as a dependent on your income tax return
  • Open a bank account in their name
  • Get medical coverage for them
  • Apply for government services for them

Keep your Social Security card in a safe place to protect yourself from identity theft.

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How To Calculate Social Security Benefits In Excel

If you are in your late 50s and approaching retirement, you can create a useful model of your future benefits. It works best to do this in a Microsoft Excel spreadsheet, as follows:

  • Using a recent Social Security statement, list in spreadsheet column A your taxable Social Security earnings year by year.
  • List in column B the most recently published NAWI adjustment factors as published by the SSA.
  • Multiply columns A and B and output the result to column C.
  • Identify in column D the 35 highest values in column C. Add these together and divide the sum by 420 . This will approximate your AIME.
  • Use the most recently published bend points to convert your AIME into a PIA.

You also can fill in hypothetical values for estimated taxable Social Security earnings in future years until you plan to stop working. To be conservative, use a NAWI adjustment factor of 1.0 in column B for all future years.

A financial advisor who fully understands this process can be helpful in verifying your calculations, advising you on when to start Social Security benefits, and estimating the future benefits you can expect to receive.

D You Can Stop Working And Not Begin Receiving Your Retirement Benefits

We calculate your benefits based on your highest 35 years of earnings. If you stop working before you have 35 years of earnings, or you have low earnings for some years, this will affect your benefit calculation. However, if you wait to start benefits after you reach full retirement age, your benefits will increase for each month you do not receive them until you reach age 70. There is no incentive to delay filing for your benefits after age 70.

If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Original Medicare three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.

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Learn More About Social Security

The rules around Social Security can vary from very simple to fairly complicated. Our special coverage in Fidelity Viewpoints® includes topics such as working while retired, taxes, and more.

In our special video series, a Fidelity professional answers some of the most commonly asked customer questions about Social Security.

Get The Ssa To Help You Make Your Best Guess

How to Estimate your Social Security Benefits | Your Retirement Authority

The Social Security Administration has created several calculators to try to make it easier to come up with reasonable estimates of what your benefits will be. In particular, four calculators can give you benefit estimates with varying degrees of sophistication and precision:

Finally, one place where you can always get a basic estimate that’s tailored reasonably well to your past work history is from your Social Security benefits statement. The SSA now mails out paper statements only once every five years, but you can always access yours via the internet from the mySocialSecurity website.

Until it’s actually time to file, you can’t know for certain how much your Social Security monthly benefits will be. Yet by looking at estimates, you’ll likely get close enough to be able to make good plans about your retirement finances.

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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How Do Benefits Work And How Can I Qualify

While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:

  • Those who are currently retired

  • To people with disabilities

  • To the surviving spouses and children of workers who have died

Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.

There are four main types of benefits that the SSA offers:

  • Learn about earning limits if you plan to work while receiving Social Security benefits

Know The Impact Of Continuing To Work

When you claim Social Security at 62, know that you are subject to a cap on wage income. For every $2 you earn above the cap, your Social Security benefit is reduced by $1. The cap changes annually, but it’s $18,960 in 2021. If you expect to earn $1,000 monthly from Social Security, it only takes wage income of about $43,000 to wipe out your benefit entirely.

Once you reach your FRA, the earnings restriction falls away. You can work and earn as much as you want, without any reduction to your benefit.

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If You Are Still Working And Receiving Old Age Security Payments

If you are still working and your income is higher than $79,054 , you will have to repay part of your Old Age Security pension payment. Delaying your first payment can let you keep more of your pension.

If you are planning on receiving the Guaranteed Income Supplement and your income is less than what you reported on your tax form last year, contact us.

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