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What Is My Projected Social Security Income

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What Is My Approximate Estimated Social Security Benefit

You should regularly check the estimated Social Security benefit youll eventually get

It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. This service shall not infer that company assumes any fiduciary duties. In addition, such service should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. These are hypothetical examples for illustrative purposes only, and may not be used to project or predict results.

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How To Correct An Error On Your Social Security Statement

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.

Gen X: Plan On A 10% Reduction

If you were born 1965 through 1980, planning for your retirement income becomes more important than ever, warns Mantell.

Elsasser recommends planning on a 10% reduction in your Social Security benefits and doing retirement projection that includes a reduced Social Security amount to balance your lifestyle today with the lifestyle youd like to live in retirement.

The good news about this bad news? For the 65 million of you who are between the ages of 41 and 56, you are in your peak earnings years, says Mantell. And that means you can and will need to ramp up your personal savings.

Youll be well-served to rethink, rebudget and redesign your spending and your savings strategy in case Social Security delivers less in income than currently projected, she cautions. You have time on your side, and every $1,000 or $2,000 or $5,000 you can sock away now will increase your income for retirement and balance out the trade-offs that you may have to make.

And whats the worst-scenario if you ramp up your savings and theres cut in Social Security benefits? You end up with more than you need, says Elsasser.

Read Also: How To Find Out My Current Social Security Benefits

How Are Benefits Calculated

There are two formulas at work: one based on your 35 highest-earning years indexed for inflation and another that transforms that calculation into the monthly benefit estimates we understand. The bottom line is the more you earn over your lifetime, the more you can expect to receive from Social Security. Higher earnings in the years just prior to retiring may increase your benefit, too.

That said, theres a limit to the amount of annual income that qualifies for the Social Security calculation. The taxable maximum is $142,800 for 2021 and $147,000 in 2022.1 If you earn more than the annual maximum in a given year as an employee, the income above that threshold wont be subject to the 6.2% Social Security payroll tax .

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3 Examples of How Social Security Robs Americans of ...

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Recommended Reading: How To Find Out My Current Social Security Benefits

How To Estimate Your Social Security Income

Two facts are knownSocial Security benefits are not guaranteed, and some changes will be necessary to keep the system solvent in the future as millions of baby boomers retire and begin to receive their Social Security benefits. Though these facts create uncertainty, its also true that the quality of your retirement depends on your planningand you must start planning somewhere.

A good starting point is to figure out the dollar amount of the retirement benefits to which all of your years of Social Security contributions entitle you under current law. There are four ways to do this:

  • Visit a local Social Security office to get a record of your taxed Social Security earnings and an estimate of retirement benefits .
  • Visit the Social Security website and use one of its online benefit calculators to determine your retirement estimate based on your earnings record.
  • Wait until you decide to start receiving benefits, and let the SSA calculate the amount for you. However, this doesnt help you plan, and though the SSA can usually be counted on to determine benefits accurately, mistakes are sometimes made.
  • Calculate your own benefits using the step-by-step process described in this article. When you understand a few basic concepts, its not that difficult. One advantage of calculating your own benefits is that you can make decisions and consider trade-offs, such as whether you can afford to retire early or how much you can increase your benefits by continuing to work.
  • Calculate My Social Security Income

    These days thereâs a lot of doom and gloom about Social Securityâs solvency – or lack thereof. And regardless of whether you think Social Securityâs future is secure, the fact remains that you shouldnât plan on living exclusively off your Social Security benefits. After all, Social Security wasnât designed to make up a retireeâs entire income.

    Still, many people do find themselves in the position of having to live off their Social Security checks. And even if you have other income sources in retirement, Social Security can make up a significant part of your retirement income plan. That’s why itâs important to know all the rules surrounding eligibility, benefit amounts, taxation and more.

    Do you need help managing your retirement savings? To find a financial advisor near you, try our free online matching tool.

    Also Check: How To Find Out My Current Social Security Benefits

    Definition And Example Of Social Security

    Social Security is a federal benefits program that pays benefits to retirees and workers who are disabled, as well as their family members and survivors.

    • Alternate name: Old-Age, Survivors, and Disability Insurance Program
    • Acronym: OASDI

    For example, workers who have paid into Social Security for at least 10 years are generally eligible to receive Social Security retirement benefits when they turn 62 years old.

    How Can I Increase My Benefit

    Social security costs expected to exceed total income in 2021: Report

    Although theres nothing you can do to revise your earnings history, there are other steps you can take to boost your Social Security payouts.

    • Work longer: If you dont yet have 35 years of income history, every additional year you work replaces a zero-income year. And if youre currently earning your peak income, every additional year you work could replace a year in which your earnings were lower.
    • Wait to collect: Although you can start collecting Social Security as early as age 62, waiting to collect will boost your monthly check. Receiving your benefits before full retirement agewhich is between 66 and 67, depending on your birth yearwill reduce your payment between 5% and 7% each year. If you can afford to wait, every year you delay past retirement age will increase your annual payout about 8% until age 70, when the benefit increases stop. Youll receive from 24% to 32% more than if you had begun collecting at your full retirement ageand roughly 76% more than if you had begun collecting at 62.

    Of course, its not always possible to work longer or wait to collect. Those in poor health or who need the income to make ends meet, for example, might decide to take Social Security as soon as possible.

    When waiting pays off

    The example is hypothetical and provided for illustrative purposes only. Monthly benefit at any age varies widely by individual based on their earning history.

    Don’t Miss: How Does Social Security Figure Out Benefits

    The Source Ofand Solution Tothe Problem

    When the current Social Security formula was put in place in 1977, no provision was made for the contingency that economic conditions would be so dire that average wages would fall in any given year. This problem first surfaced in 2009 during the Great Recession. The AWI, however, fell by a relatively small amount, and policymakers chose not to do anything about it. As a result of the COVID-19 pandemic, however, the decline in the AWI is likely to be about four times as big now as it was during the Great Recession.

    There is ample precedent for fixing this problem. The first precedent concerns Social Security cost-of-living allowances . As mentioned above, payments in years after beneficiaries first year of retirement are indexed to inflation using a version of the consumer price index . However, under the law, if prices fall in any year, benefits are not adjusted downward rather, they remain the same. The second precedent concerns the Social Security contribution and benefit base, also known as the taxable maximum. The taxable maximum is the dollar amount of annual earnings above which the Social Security payroll tax does not apply. The taxable maximum is indexed to the AWIbut like COLAs, it is never adjusted downward.

    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.

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    Using Your Benefit Estimates

    As your statement will show, your Social Security retirement benefits will vary depending on when you claim them before or after your full retirement age . The longer you wait to start receiving payments, the higher your benefit amount will be.

    However, it’s not always better to wait until your full retirement age to claim your Social Security benefits. If you need your Social Security benefits for living expenses, or you have a health condition that makes it unlikely that you will live past age 75 or so, you may be better off collecting your benefits sooner rather than later. You can use a calculator at the Social Security website to see which retirement age makes the most financial sense for you .

    For comprehensive practical information about how and when to claim Social Security benefits, see Social Security, Medicare & Government Pensions, by Joseph Matthews with Dorothy Matthews Berman .

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  • What If I Continue Working In My 60s

    What You Need To Know About Social Security Even If Youâve ...

    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.

    Read Also: How Much Money Will I Get From Social Security When I Retire

    More Answers: Income & Household Size

    How do I upload documents to verify my income for the Marketplace?

    If the Marketplace tells you to provide pay stubs, self-employment records, or other information to verify your income, follow these directions to upload documents.

    What is “MAGI,” and do I need to use it for anything?

    The Heath Insurance Marketplace uses an income figure called Modified Adjusted Gross Income to determine the programs and savings you qualify for. For most people, its identical or very close to Adjusted Gross Income . MAGI is not a line on your federal tax return.

    The estimate instructions above are based on MAGI, but its not a term you need to know in order to apply or use tools on this site.
    What if I dont know my households recent Adjusted Gross Income?

    Start with federal taxable wages for each income earner in your household.

    • You should find this amount on your pay stub.
    • If it’s not on your pay stub, use gross income before taxes. Then subtract any money the employer takes out for health coverage, child care, or retirement savings.
    • Multiply federal taxable wages by the number of paychecks you expect in the tax year to estimate your income.

    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.

    Read Also: How To Find Out My Current Social Security Benefits

    Social Security Vs Supplemental Security Income

    Sometimes people confuse Social Security and Supplemental Security Income . While both programs are administered by the Social Security Administration, they are intended for different groups of people and are financed in different ways.

    Social Security, for example, pays out benefits to individuals, their families, and their survivors based on how long that individual worked without respect to need.

    SSI, on the other hand, is needs-based and not based on an individuals work history.

    While Social Security is funded by special payroll taxes deposited into the two Social Security trust funds, SSI is funded by general tax revenues.

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