When you retire and start collecting Social Security benefits, the amount of monthly income you get from the program depends on a number of factors, from the amount of money you earned during your career to the age at which you retire.
Lifetime earnings concerning work which resulted in you paying Social Security taxes will be the biggest factor in determining your benefits. Higher income typically means a bigger benefit, but there’s a cap on how much you can receive.
For those looking to examine a nice round number, the average Social Security retirement benefit in May 2022 was $1,668 a month, according to the AARP. The maximum benefit, or the most an individual retiree can get, is $3,345 a month for someone who files for Social Security in 2022 at the full retirement age (FRA). The FRA is point at which you qualify for 100% of the benefit based on your earnings history and the amount of Social Security taxes you paid while working. Only by delaying retirement beyond your FRA can you exceed the maximum benefit (topping out at 132% of your maximum benefit if you delay retirement until age 70, per the Social Security Administration, or SSA).
Your specific full retirement age depends on when you were born. For example, the FRA is 66 years and four months for people born in 1956, and then gradually rises to 67 years for those born in 1960 or later. To determine your FRA, use the SSA’s Retirement Age Calculator.
Although you won’t know exactly how much Social Security income you’ll make until you apply, there are ways to get a ballpark figure ahead of time. A couple of options are the AARP’s Social Security Benefits Calculator and your personal My Social Security account on the SSA website. The AARP calculator will ask you to provide your average annual income during your career. The SSA option will provide an estimate based on your earnings record with the agency.
Both options provide estimated Social Security retirement benefits based on your earnings and when you choose to retire. The earliest age you can apply for retirement benefits is 62. The latest age is 70. The longer you wait to file for benefits, the higher your monthly check will be.
How Are Social Security Benefit Payments Calculated?
Keep in mind that Social Security payments are calculated using the 35 highest-earning years of your career, U.S. News reported. If you work for more than 35 years, your lowest-earning years are dropped from the calculation, boosting your payment. Those who don’t work for 35 years have zeros averaged into the calculation and receive lower payments.
The AARP provides the following example on its website: Suppose you were born on Jan. 1, 1960, and had an average annual income of $50,000. As of June 2022, you would would get a monthly benefit of $1,338 if you file for Social Security at 62; $1,911 at full retirement age (in this case, 67); or $2,370 at 70.
Another thing to keep in mind: Social Security sets a cap on how much of your income it takes into account when figuring your benefit. In 2022 the cap is $147,000 a year, though that figure changes annually to account for wage trends. Any income above that is not counted in your benefit calculation, but is also not subject to Social Security taxes.
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