When receiving Social Security retirement or survivor benefits, you are able to continue working. If you do, you and your family may benefit more from it.
Every year, we examine all Social Security beneficiaries’ records that include wage reports from the prior year. We recalculate your benefit and pay you any increase you are due if your most recent year of earnings is one of your highest years. The increase takes effect in January of the year following your income. Should you be eligible for survivors benefits, the extra income may enable your retirement benefit to surpass your existing survivors benefit.
Understanding Your Social Security Benefit Amount
Social Security provides crucial financial support to millions of Americans, offering retirement income, disability benefits, and survivor benefits. The amount you receive per month depends on various factors, including your earnings history, age at retirement, and filing date. This guide will delve into the key aspects of Social Security benefits, helping you estimate your potential monthly payout.
Calculating Your Social Security Benefit
Average Indexed Monthly Earnings (AIME):
The foundation of your Social Security benefit calculation is your Average Indexed Monthly Earnings (AIME). This figure represents your average monthly earnings throughout your working life, adjusted for inflation. The Social Security Administration (SSA) considers your earnings from up to 35 years, prioritizing those with the highest indexed values.
Primary Insurance Amount (PIA):
Your AIME is then plugged into a formula to determine your Primary Insurance Amount (PIA). The PIA serves as the base for your monthly retirement benefit. The formula incorporates specific percentages applied to different portions of your AIME, adjusted annually based on the national average wage index.
Bend Points:
The PIA formula utilizes “bend points,” which are dollar amounts dividing your AIME into segments. The percentages applied to each segment vary, impacting your overall PIA calculation. For instance, in 2024, the bend points are $1,174 and $7,078.
Monthly Benefit Amount:
Your monthly retirement benefit may differ from your PIA based on your retirement age. Early retirement before your full retirement age results in a reduced benefit, typically 30% lower. Conversely, delaying retirement beyond your full retirement age can increase your benefit by up to 8% per year for those born after 1942.
Estimating Your Social Security Benefits
Quick Calculator:
The SSA provides a “Quick Calculator” tool to assist you in estimating your potential monthly benefits. This tool requires your date of birth, current year’s earnings, and desired retirement date. Based on this information, the calculator generates an approximate benefit estimate.
Factors Influencing Your Benefit:
Remember, your actual monthly benefit may vary due to several factors:
- Earnings history: Higher lifetime earnings generally translate into higher benefits.
- Age at retirement: Early or delayed retirement impacts your benefit amount.
- Full retirement age: This age, based on your birth year, determines your unreduced benefit.
- Cost-of-living adjustments (COLAs): Annual COLAs increase benefits to keep pace with inflation.
Additional Resources
Social Security Administration Website:
The SSA website offers a wealth of information on benefits, eligibility, and claiming processes. You can access detailed explanations, calculators, and online applications through their portal.
Social Security Statement:
Requesting a free Social Security statement provides a personalized summary of your earnings history and estimated future benefits. This statement helps you track your progress and plan for retirement.
Understanding your potential Social Security benefits is crucial for planning your financial future. By utilizing the tools and resources available, you can estimate your monthly payout and make informed decisions about your retirement income. Remember, factors like your earnings history, age at retirement, and claiming strategy play a significant role in determining your benefit amount.
These calculators estimate your monthly benefits if you begin receiving Social Security at age 62, which is the earliest age at which you can apply for retirement benefits, at full retirement age, and at age 70. Social Security lowers your benefit for filing early between 62 and FRA; however, it increases your payment between FRA and 70 as compensation for waiting.
The amount of your income that Social Security uses to calculate your benefit is capped. The cap is set at $168,600 in 2024 and is yearly adjusted to account for historical wage trends. Any income over that is not included in determining your benefits and is not liable to Social Security taxes.
Based on your lifetime earnings from employment for which you paid Social Security taxes, your retirement benefit is calculated. Greater benefits are correlated with higher income (up to a point; see below for more information). Other factors affect how much you are entitled to, but the age at which you claim benefits is the most important one.
Although you can only be certain of your own amount at the time of application, there are methods to get an idea of it beforehand. The quickest and most straightforward ways are to check your online My Social Security account or use the AARP Social Security Benefits Calculator. The AARP calculator requires your average annual income, while the latter uses your earnings record that is on file with the Social Security Administration.
For instance, according to the AARP calculator, an unmarried person born on January 1, 1962, who has earned $50,000 on average annually, would receive a monthly benefit of $1,386 if they applied to begin receiving retirement benefits at age 62; $1,980 at age 67; or $2,455 at age 70. The AARP tool can also help you budget for your retirement years, provide you with numbers for every age in between, and assess the impact of staying employed on your benefits.
How Much Can I Earn and Still Get Benefits?
In our eyes, you are retired when you start getting Social Security retirement benefits. It is possible to work and receive Social Security retirement or survivors benefits simultaneously. There is a cap on the amount you can make though and still be eligible for all benefits.
We reserve the right to lower your benefit amount if you are under full retirement age and earn more than the annual earnings cap.
For every $2 you earn over the annual cap, we deduct $1 from your benefit payments if you are not yet at full retirement age for the entire year. For 2024, that limit is $22,320.
We deduct $1 from your benefits in the year you reach full retirement age for every $3 you earn over a certain threshold. In 2024, this limit on your earnings is $59,520. Your earnings are only taken into account until the month before you become fully retired; your total earnings for the year are not taken into account.
We have a special rule that applies to earnings for one year if your earnings will exceed the annual limit and you will receive retirement benefits for a portion of the year. Regardless of your yearly earnings, the special rule allows us to pay your full Social Security benefit for any full month that we deem you retired.
When applying the annual earnings test (AET) for retirement or survivors benefits, we use your full retirement age if you receive survivors benefits. For AET purposes, we use your full retirement age for retirement benefits, even though the full retirement age for survivors benefits might be earlier. Even if the beneficiary is not eligible for retirement benefits, this rule still applies.
For additional information, see our publication “How Work Affects Your Benefits.”
When you reach full retirement age:
- No matter how much you earn, your earnings will no longer reduce your benefits starting in the month you reach full retirement age.
- In order to give you credit for the months in which we reduced or withheld benefits because of your excess earnings, we will recalculate the amount of your benefits.
Here’s How Much Money You’ll Get From Social Security
FAQ
How do you find out how much Social Security you will receive?
What is the average Social Security benefit at age 62?
How much Social Security will you get if you make $30000 a year?
How much Social Security benefits do you get a month?
Higher income translates to a bigger benefit (up to a point — more on that below). The amount you are entitled to is modified by other factors, most crucially the age at which you claim benefits. For reference, the Social Security Administration estimates that the average retirement benefit in 2024 will be $1,907 a month.
What is a social security benefit calculator?
Social Security’s benefit calculators give you a preview of your future payments. How much Social Security income you may receive when you retire will depend on: Whether you will be eligible to receive a spouse’s benefit instead of your own Estimate your retirement benefits based on when you would begin receiving them (from age 62 to 70)
How much social security do you get if you retire?
The maximum possible Social Security benefit for someone who retires at full retirement age is $3,627 in 2023. However, a worker would need to earn the maximum taxable amount, currently $160,200 for 2023, over a 35-year career to get this Social Security payment. 10 Ways to Increase Your Social Security Payments.
How much is social security based on income?
Social Security sets a cap on how much of your income it takes into account in figuring your benefit. In 2024, the cap is $168,600 (it’s adjusted annually to reflect historical wage trends). Any income above that is not counted in your benefit calculation (and is also not subject to Social Security taxes).