If you’re wondering how much you’ll receive in Social Security benefits, using a Social Security benefit calculator can give you a close estimate. However, it’s important to remember that these calculations are only approximations. Your actual benefits can vary based on your work history, income, and several other factors. This guide will walk you through the Social Security calculator, explaining its inputs and how you can use it to estimate your future benefits.
How the Social Security Benefit calculator works
Estimate your Social Security benefits based on various personal aspects with the calculator. It doesn’t guarantee what you’ll receive, but it helps you plan for retirement because it estimates how much you would have based on your current financial situation.
Key inputs for estimating Social Security benefits
When using the calculator, you’ll be asked to provide several key pieces of information:
- Current age
The first step in the calculation is to input your current age. This helps determine how many years you have left before you begin receiving Social Security. - Age of retirement
You’ll then enter the age at which you plan to start collecting Social Security. The earlier you begin, the lower your monthly benefits will be, while delaying benefits can result in higher payments. - Annual income
Your annual income plays a significant role in calculating your benefits. The calculator will use your current salary to estimate how much you could potentially receive based on your contributions to Social Security. If you’re married, you’ll need to input your income separately, excluding your spouse’s income, unless you’re including a spousal benefit. - Expected salary increase
This field asks you to estimate how much your income will grow annually. This percentage can significantly impact the amount of Social Security benefits you receive. - Expected rate of inflation
The inflation rate affects your future income as it determines how much the value of your salary and benefits will change over time. The average inflation rate in the U.S. has been 2.9% annually over the last century, though it can vary from year to year. - Marital status
If you’re married, checking the box to include your spouse’s benefit will adjust the calculator to reflect a joint Social Security benefit. This is important if one spouse doesn’t work, as it will estimate the additional benefit based on the higher wage earner’s Social Security.
Understanding Social Security income calculations
The various factors on which Social Security benefits are based include not only how long you have worked but also how much you have earned throughout your working life and the age at which you start taking your benefits. The Social Security Administration will take a formula that takes into account the highest 35 years of earnings to apply it in computing the primary insurance amount (PIA) on which benefits are based.
Benefits are calculated on a sliding scale so that lower earners receive a greater percentage of their income in benefits than higher earners do. Social Security also has a built-in benefit adjustment each year for inflation using the Consumer Price Index (CPI).
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Spousal benefits and adjustments
If you happen to be married, your Social Security benefits can also count as an additional amount for your non-working spouse. In general, if one spouse has little or no income-covered work counts, the other spouse’s Social Security benefit may be increased to provide support. This benefit is calculated to be generally about 50 percent of the higher-earning spouse’s Social Security. However, if both spouses earn their own benefits by working, then each spouse would have to do the calculation to get their Social Security estimate.
Maximum Social Security benefits
The maximum Social Security benefit is available to an individual after earning the maximum for most of his or her work life under the FICA salary. For 2017, the FICA income limit was set at $127,200, and the maximum yearly Social Security benefit was $32,244 ($2,687 per month) for a single person.
Married couples could receive 1.5 times that amount, depending on their combined income and work history. Additionally, to attain the maximum benefit, you must begin collecting benefits at full retirement age, 66 or 67, depending on your birth year.
Impact of retirement age on benefits
The Social Security benefits calculator is a good asset for estimating your retirement benefits. It’s not a guarantee” of accuracy, but it really does start to become a decent place for your retirement planning. It lets you input your current age, income, retirement age, and some other things, to help you begin to understand what your Social Security income may look like and how to make wise choices about your financial future.
Using the Social Security calculator to plan your retirement
The Social Security benefits calculator is a good asset for estimating your retirement benefits. It’s not a guarantee” of accuracy, but it does start to become a decent place for your retirement planning. It lets you input your current age, income, retirement age, and some other things to help you begin to understand what your Social Security income may look like and how to make wise choices about your financial future.
