Monday, May 16, 2022

What Is My Estimated Social Security

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How To Check Your Estimated Social Security Benefit

What is my Social Security?

For a long time, the Social Security Administration sent annual updates to current and future Social Security beneficiaries, to fill them in on what their expected benefits are.

However, the SSA no longer does that, and now requires those interested to check themselves.

WFAA recently demonstrated how to do exactly that- by signing up on Social Securitys website.

. Sign in, and itll tell you if you have worked enough already to eventually get a monthly benefit. The site will also reveal what your monthly payment is likely to be, based on your actual earnings history, the report says. You can also drag an interactive bar to see how much less you would get if you draw social security early at 62, versus waiting for the maximum payment you would get by waiting until youre 70 to tap Social Security. You can print your information or save it and come back every year to re-check.

Such an account also allows citizens to do various other things, including getting estimates for the benefits of their spouse, check their application status, and setting up direct deposit, their mailing address, and other information.

WFAA also cited a recent Vanguard report showing how much, and how little, Americans are saving money.

What If I Continue Working In My 60s

Many people whose health allows them to continue working in their 60s and beyond find that staying in the workforce keeps them young and gives them a sense of purpose. If this sounds like something youâd like to do, know that working after claiming early benefits may affect the amount you receive from Social Security. Why? Because the Social Security Administration wants to spread out your earnings so you donât outlive them. If you claim Social Security benefits early and then continue working, youâll be subject to whatâs called the Retirement Earnings Test.

If youâre between age 62 and your full retirement age, and youâre claiming benefits, you need to know about the Earnings Test Exempt Amount, a threshold that changes yearly. For 2021, the Retirement Earnings Test Exempt Amount is $18,960/year . If youâre in this age group and claiming benefits, then every $2 you make above the Exempt Amount will reduce by $1 the Social Security benefits you’ll receive.

Contrary to popular belief, this money doesnât disappear. It gets credited back to you – with interest – in the form of higher future benefits. You may hear people grumbling about the Social Security âEarnings Taxâ, but itâs not really a tax. Itâs a deferment of your benefits designed to keep you from spending too much too soon. And after you hit your full retirement age, you can work to your heartâs content without any reduction in your benefits.

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 1.0000 in column B for all future years.

A financial advisor who fully understands this process can help verify your calculations, advise you on when to start Social Security benefits, and estimate the future benefits you can expect to receive.

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How To Check Your Earnings Record

How might check your earnings record? In the past, Social Security mailed you a statement that contained your earnings record and benefit estimate. Today, however, you need to create a my Social Security account to review your earnings record. You can do that at .

When checking whether your earnings record is correct or not, keep the following in mind. One, theres no statute of limitations on correcting errors related to wages, according to Kurt Czarnowski, a principal at Czarnowski Consulting.

A person needs to provide proof of what the correct amount of earnings was, Czarnowski said at a recent National Association of Personal Financial Advisors conference. But even if it’s something back in 1976, if happen to have W-2, can make that correction.

Thats not true, however, when it comes to correcting self-employment income errors on your Social Security statement. You have only three years, three months and 15 days to correct those errors, Czarnowski explained.

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

Downloadable Social Security Benefit Estimator ...

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.

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Will Your Expenses Decrease After You Retire

Retirement could be more expensive than you expect.

If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

Retirement could be more expensive than you expect.

If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

Maintain your lifestyle by planning ahead.

Maintain your lifestyle by planning ahead.

Many people find retirement is more expensive than expected.

Many people find retirement is more expensive than expected.

Heres How We Estimated Our 2023 Cost Of Living Increase Number:

First, we need to calculate the Average CPI-W Index Points for the Third Quarter of 2021, , which was 268.421.

Second, we need to estimate the Average CPI-W Index Points for the Third Quarter of 2022, , which is 279.325.

Finally, we took the percentage increase from the third quarter average for 2021, compared to the third quarter estimated average for 2022, and multiply by 100%.

The final COLA calculation for 2023 could look like this: / 268.421) * 100% = 4.1%.

Bureau of Labor Statistics data series for the Consumer Price Index for Urban Wage Earners and Clerical Workers for 2021 and an estimate for 2022, at: .

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How To Receive Federal 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.

How To Calculate Social Security Benefits

How Much Are Your Social Security Disability Benefits Worth?

Retirement can be an exciting time, but it can also be scary for some. You might be wondering whether you have put enough money away for retirement. Everyone wants to make sure that they have enough income during retirement to continue to pay for their expenses. Since most retirees will rely at least partially on Social Security benefits, it is imperative that they know how much money they will be receiving from the Social Security Administration upon retirement. Thankfully, there are a few ways that you can estimate the amount of your retirement benefits. If you are approaching retirement age, then you can go ahead and estimate your benefits so that you can plan and budget accordingly when you are ready to leave your full time employment.

  • What is the average monthly Social Security payment in the US?
  • Also Check: How Does Social Security Figure Benefits

    Policy Basics: Top Ten Facts About Social Security

    Social Security provides a foundation of income on which workers can build to plan for their retirement. It also provides valuable social insurance protection to workers who become disabled and to families whose breadwinner dies.

    Eighty-five years after President Franklin Roosevelt signed the Social Security Act on August 14, 1935, Social Security remains one of the nations most successful, effective, and popular programs.

    How To Workaround An Inaccurate Social Security Benefits Estimate For Planning Purposes

    Lets look at an example case to see how badly your SocialSecurity benefits estimate can skew your planning if you work with inaccuratenumbers and the simple adjustment you can make to get a more accurateprojection.

    Jeremy got his first job in 1996 atthe age of 22. His starting pay was $40,000 per year and every year since, he earneda 3% raise. This gives him a 2019 salary of $78,943.When the SSA estimates his future benefits, they assume that the prior yearssalary will continue until his retirement at either age 62, 67 or 70.

    So how does this affect theestimate?

    To figure this out we can use the SocialSecurity Online Calculator . If we plug inJeremys earnings and use the todays dollars option, it gives him a benefitat age 67 of $2,452 per month. If you simplychange that to future dollars it changes the benefit at age 67 to$5,464 per month thats a $3,012 per month jump in benefits!

    Which is why I offer this quickword of warning: dont use the inflation methodoption here to estimate your future benefit. Its too high. The assumptions they use are 4% or higher for future wageswhich will be applied to both your earnings andthe benefits formula.

    Instead, you need to get under thehood and figure out for yourself how to calculate your benefit. I promise:its not that hard. For a step-by-step video,check out my guide on How To CalculateSocial Security Benefits

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    Retiring Early Before 35 Years Of Work History

    For those who dont even have 35 years of historical income, though, the effect of retiring early can be even more substantial. For instance, if the individual above had been aiming to retire even earlier, then the reality is that social security early retirement age 55 likely doesnt even have 35 years of earnings history. As a result, the additional projected years of working through full retirement age would both fill out the remainder of the highest 35 years, and replace lower earning years with new higher years. The exclusion of both if retirement occurs early can be substantial.

    As the chart above shows, projected Social Security benefits would include 8 more years of $125,000/year earnings to complete the 35-year earnings history, and the subsequent 8 years would further increase AIME by overriding 8 early years that were at lower income levels. As a result, projected Social Security benefits would be $2,854.42/month based on an AIME of $9,885.71/month . However, if the individual actually retires at age 50, and simply locks in the benefits hes actually earned, the 35-year AIME would be only $8,220.24, and Social Security retirement benefits would actually be just $2,606.21/month, not $2,854.42 as projected with continued work!

    How Long Can You Stay On Each Page

    How to Access Your Social Security Benefits Statement

    For security reasons, there are time limits for viewing each page. You will receive a warning if you dont do anything for 25 minutes, but you will be able to extend your time on the page.

    After the third warning on a page, you must move to another page. If you do not, your time will run out and your work on that page will be lost.

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    How Social Security Benefits Are Projected At Retirement

    As noted earlier, Social Security benefits are calculated as an income replacement rate based on 35 years of your historical earnings . Which means when youre just getting started in your career as a teenager or 20-something, most of your 35-year average of earnings would be $0s, and any projection of Social Security benefits based on actual earnings would be near $0 in the early years. You wouldnt really know how well your Social Security benefits were on track to replace your income in retirement until you actually had 35 working years to see the cumulative benefit .

    Accordingly, the Social Security Administration provides a regular statement to project future Social Security benefits, assuming that you will continue to earn at your current income level . This is shown as your estimated taxable earnings per year after 2017 on the front page of the Social Security benefits statement. And projected benefits on the Social Security statement assume that amount will continue to be earned in every year until full retirement age which can substantially change the individuals historical earnings for calculating benefits .

    Example 2. Andrew is a 32-year-old whose income has averaged about $35,000/year over the past 12 years . For the past 2 years, his annual salary is up to $48,000/year.

    Heres The Formula To Calculate A Cola Increase:

    First, we need to calculate the Average CPI-W Index Points for Third Quarter of 2020 , which was 253.412.

    Second, we need to calculate the Average CPI-W Index Points for the Third Quarter of 2021, , which was 268.421.

    Finally, take the percentage increase or decrease from the third quarter average for 2020, compared to the third quarter average for 2021, and multiply by 100%

    The final COLA calculation for 2022 looked like this: / 253.412) * 100% = 5.9%.

    Bureau of Labor Statistics data series for the Consumer Price Index for Urban Wage Earners and Clerical Workers for 2020 and 2021, at: .

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    Whats Social Security For

    As a general rule, Social Security replaces about 55% of a low earners pre-retirement salary, 41% of an average earners pre-retirement salary, and 34% of a high earners pre-retirement salary.

    In no case, high, low, or average earner does it replace 100% of what someone is making, said Czarnowski. Rather, its meant to be a foundation to someones retirement income plan.

    How To Correct An Error On Your Social Security Statement

    How To Estimate Your NEW Social Security, SSI, SSDI Monthly Benefits Amounts for 2022

    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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    How To File Social Security Income On Your Federal Taxes

    Once you calculate the amount of your taxable Social Security income, you will need to enter that amount on your income tax form. Luckily, this part is easy. First, find the total amount of your benefits. This will be in box 3 of your Form SSA-1099. Then, on Form 1040, you will write the total amount of your Social Security benefits on line 5a and the taxable amount on line 5b.

    Note that if you are filing or amending a tax return for the 2017 tax year or earlier, you will need to file with either Form 1040-A or 1040. The 2017 1040-EZ did not allow you to report Social Security income.

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