Social Security’s Retirement Estimator Calculator

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When To Apply For Benefits How Much Youll Get

Social Security Retirement Calculator

AARP, Updated May 25 , 2022

All the information presented is for educational and resource purposes only. It is not intended to provide specific or investment advice. We don’t guarantee the accuracy of the tool and suggest that you consult with your advisor regarding your individual situation.

How To Calculate The Impact Of A Benefit Cut

Covisum, a provider of Social Security claiming software, recently updated its calculator to reflect the Social Security trustees’ latest projections. That includes a free version for consumers and a more complex paid version for financial advisors.

Another product, Maximize My Social Security, lets consumers evaluate which claiming strategy might best suit them for a $40 annual fee. It also has a separate version for financial advisors.

The free Covisum calculator can help individuals do a quick calculation based on their benefits alone and some key facts year of birth, full retirement age benefit amount, percentage of the benefit cut and the year that benefit cut occurs.

So someone turning their full retirement age this year, for example, can calculate the effect of a 23% reduction in benefits starting in 2034, as well as the effect of no benefit cut.For each scenario, the calculator will show the value of claiming either at age 65 or age 70, and when beneficiaries stand to get the maximum amount possible from the program.As beneficiaries live longer, the value of waiting to claim until 70 goes up, as demonstrated in the difference in total benefits per the tool’s calculations.

To be sure, the free calculator is just a starting point when it comes to getting a sense of the trade-offs when claiming Social Security, according to Joe Elsasser, founder and president of Covisum.

Windfall Elimination Provision Calculator

The Windfall Elimination Provision is poorly understood and catches a lot of people by surprise.

This calculator will tell you:

  • The amount of Social Security benefit you can expect after the WEP reduction
  • The number of substantial earnings years you already have
  • How additional years of substantial earnings will affect the WEP penalty

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Compare Two Application Ages

Use the following calculation to compare the financial difference between two Social Security retirement benefit application ages. The U.S. Social Security website provides estimated benefit payment amounts of different claim ages.

The term “Social Security” is used in the U.S. to refer to the system that provides monetary assistance to people with inadequate or no income. The term can be better understood by thinking of it as the “financial security of society.” Although they may not go by the same name, there are many similar government systems in place throughout the world. This calculator is specifically intended for U.S. Social Security purposes.

How Does The Social Security Administration Calculate Benefits

10 free or cheap Social Security calculators to help you plan ...

Benefits also depend on how much money youâve earned in life. The Social Security Administration takes your highest-earning 35 years of covered wages and averages them, indexing for inflation. They give you a big fat âzeroâ for each year you donât have earnings, so people who worked for fewer than 35 years may see lower benefits.

The Social Security Administration also makes annual Cost of Living Adjustments, even as you collect benefits. That means the retirement income you collect from Social Security has built-in protection against inflation. For many people, Social Security is the only form of retirement income they have that is directly linked to inflation. Itâs a big perk that doesnât get a lot of attention.

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Is Social Security All You Need To Retire

Generally not. Social Security is not intended to be your only source of retirement income. On average, beneficiaries receive about 40% of their pre-retirement income through Social Security benefits. According to the Social Security Administration, most financial advisers say youll need at least 70% of your pre-retirement income to comfortably meet your expenses in retirement.

Here are few other ways to save for retirement:

How Much To Save For Retirement

Naturally, the next question becomes: how much should a person save for retirement? Simply put, it’s an extremely loaded question with very few definite answers. Similar to the answer to the question of whether to retire or not, it will depend on each person, and factors such as how much income will be needed, entitlement for Social Security retirement benefits, health and life expectancy, personal preferences regarding inheritances, and many other things.

Below are some general guidelines.

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How Do I Increase My Social Security Benefits After Retirement

To increase your monthly benefit, don’t start taking Social Security payments right when you reach full retirement age. The longer you wait, the more you’ll get each month. If you want to get the highest possible amount of Social Security benefits each month, you need to wait until age 70 to retire.

Primary Insurance Amount Calculation

How to Calculate Your Social Security Benefits

For 2022, the SSA established the first bend point as $1,024 and the second bend point as $6,172. Using the AIME from the earlier example of $10,141 and the bend points, we can calculate the primary insurance amount .

Below are the steps to calculating the PIA:

  • Multiply the first $1,024 of the person’s AIME by 90% = $921.60
  • Subtract the 1st and 2nd bend point and multiply that difference by 32% = $5,148*.32 = $1,647.35*
  • Subtract the 2nd bend point amount from the total AIME amount and multiply the difference by 15%. = $3,969*.15 = $595.35

*Please note that the calculation results are required to be rounded down to the next lower multiple of 10 cents.

  • The PIA is the sum of the three calculation results: = $3,164.30

*The multipliers90%, 32%, and 15%are set by law and do not change annually. The bend points are inflation-indexed but only through age 62. PIA is effectively locked in at age 62.

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How Much Savings Do You Need To Retire With A Pension

Having a pension helps provide you with an additional source of retirement income and eases some, but probably not all, of the burden of saving for retirement. If you are fortunate enough to have a retirement pension plan provided by your employer, you are in the minority these days. According to the U.S. Bureau of Labor Statistics, only 13% of private industry workers had access to both defined benefit and defined contribution ) retirement plans at their workplace in March 2018.

With a defined benefit plan, your employer makes contributions to the plan. You then receive this pension money in retirement either as a lump sum or as a monthly payment or as some combination of the two. If your employer offers a pension plan, its important to understand how it works and its benefits and how your pension fits into your overall retirement savings strategy. Our Retirement Savings Calculator incorporates your inflation-adjusted pension plan benefit, if you have one.

Are You Eligible For Social Security

To be eligible for Social Security benefits, you must earn at least 40 credits over your working career. How those credits are calculated is complex, but you will likely qualify if you have worked for at least 10 years.

You may be entitled to a spousal benefit because of your partner’s work history. If your spouse, ex-spouse, or deceased spouse has earned 40 credits, you may qualify. The Social Security Administration provides more info about this option.

But your work history is not only used as part of the qualification criteria it is also used to figure out the amount of your payment. In calculating your monthly retirement benefit, the SSA considers your highest-earning 35 years of work history. If you worked for less than 35 years, the SSA will use zero for some years.

The higher your earnings over those 35 years, the greater your contribution to the program through FICA taxes, and the higher your benefit will be.

The same threshold applies to both your earnings and your benefits. This amount is $142,800 in 2021, and it will raise to $147,000 for the 2022 tax year.

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Do You Have Enough Money To Retire Now

Our Retirement Savings Calculator can help you answer that question, which depends on a number of different factors, including your current age, how much you have already saved for retirement and how many years of retirement income you think youll need in the future. If are considering an early retirement, you will want to think about how your pension and Social Security will be affected. If you have a pension with your employer, when are you eligible to start receiving it? Will it be a lump sum payment, a monthly pension amount or both? You may begin receiving Social Security benefits as early as age 62 or as late as age 70. Keep in mind, however, that if you retire early, your benefits are reduced by a certain percentage for each month before your full retirement age.

Our Financial Education articles can offer you additional financial tips about Social Security, taxes, health care and more to help you determine how much money you need to retire at age 50, age 55, age 60, age 62 and age 65.

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Can You Add Up Your And Your Spouse’s Social Security Benefits

The 10 Best Retirement Calculators

If your retirement calculator doesn’t model your and your spouse’s Social Security benefits separately, it is tempting to enter the sum of your benefits.

That should work, right?

Not exactly. Even though you can get a good future dollars estimate from the SSA calculators for you and your spouse separately, simply adding them together assumes you will commence your Social Security benefits at the same time. This is rarely the case. Even if you retire at the same time, you may choose to start receiving benefits at different times. For example, many people wait until age 70 to start cashing in on their benefits. In that case, even a one-year age difference means your calculations will be off by an entire year of Social Security income.

Adding your Social Security benefits together also assumes that you and your spouse die at the same time. In reality, one of you will likely die before the other, and the survivor will get a survivor benefit if larger than their own.

And while on the topic of spouses, do consider “spousal benefits” as well. This is the benefit your spouse can be paid if higher than their own earned benefit . While you can get a future dollars estimate of each other’s spousal benefits from the SSA calculators, it will be far more convenient if your retirement calculator can calculate them and factor them automatically.

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Why Estimate Your Social Security Benefits

When youre planning for retirement, figuring out how much youll receive from Social Security is an important part of determining your complete financial picture. Depending on your situation, you also may be interested in estimating divorced spouse benefits, survivor benefits, and disability benefits as well. Getting an accurate number is important, so take care to avoid overlooking or overstating the value of your Social Security benefits.

While predicting the future of Social Security is difficult because of questions about its solvency mean it may change in the future. Its more likely that the younger and more financially well off you are, the more changes will affect you. But keep in mind that even if you plan to retire in the next few years, Social Security was never meant to be a retirees sole source of income. As President Dwight D. Eisenhower famously said: The system is not intended as a substitute for private savings, pension plans, and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built. Determining your Social Security benefits now helps to create an effective long-term retirement strategy and to understand benefits that might protect your family if you or your spouse dies or becomes disabled.

Tapering Of Benefits Calculator

The Tapering of Benefits Scheme is intended to introduce persons in receipt of Unemployment Assistance , Social Assistance and Social Assistance for Single Unmarried Parents to employment. Tapering of Benefits is given for a 3 year period to those beneficiaries who become engaged in employment or also as self-occupied, as long as they earn the national minimum wage or more. In case of SUP beneficiaries, they can also be eligible if they work part-time.

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Retirement Calculator Dangers Revealed

In fact, your estimate for how much money you need to retire is only as accurate as the assumptions used to make that estimate. If your input assumption is wrong then your retirement estimate is wrong as well because its merely a mathematical projection of the chosen assumptions nothing more.

Dont be deluded by the apparent mathematical precision of a retirement calculator into believing the estimate provided is similarly accurate. It isnt.

How Much Social Security Will You Get When You Retire

3 Free Calculators To Help You Decide When To Start Social Security

The amount of your Social Security benefit is a function of your full retirement age. If you were born in 1960 or after, your normal retirement age when you are eligible to receive full or unreduced Social Security benefits is 67. When you choose to retire is central to your retirement planning strategy because it activates your various streams of retirement income: drawing upon Social Security and your pension, if you have one, as well as beginning withdrawals from your other retirement accounts, such as your 401 or IRA, and other possible income sources like annuities. With the right planning, you may be able to retire early and depend on alternative sources of retirement income until you reach your normal retirement age, at which point you can start collecting your full Social Security benefits. You also can increase your Social Security benefit amount by waiting beyond your full retirement age to retire. However, the benefit increase stops when you reach age 70. Access my Social Security Retirement Calculator to learn more.

Our Retirement Savings Calculator gives you the option of including your Social Security benefits in its calculations to determine if you have enough funds to retire. Discover how early retirement can affect your Social Security benefits and the truth behind some common Social Security myths.

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Yp’s Retirement Calculator Reveals Your Path To Financial Freedom

Whether you are just graduating high school and beginning your adult life or are nearing the end of your work life and are ready for retirement, YP Investors retirement calculator will help you plan out your path to retirement. This calculator was made to help everyone think ahead in life and make plans to live happy and financially free in the future. It is never too late to start saving for retirement, starting at any point is always better than never starting. Good luck on your investments and we hope you are able to live financially free in the near future if you don’t already!

How To Obtain Your Benefits Estimate

Using your actual earnings record, you can estimate your retirement benefit online with the Retirement Estimator calculator on the Social Security Administration website at ssa.gov. You also can create different scenarios based on current regulations that show how different earnings amounts and retirement ages will affect it. The site also includes other benefit calculators to help you estimate disability and survivor benefits. Make sure to sign up to view your Social Security statement, which includes a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If youre not registered for an online account and are not yet receiving benefits, youll receive a statement in the mail every year, starting at age 60.

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One Calculation Two Answers

The SSA calculators produce two sets of results – measured in current dollars and future dollars. Picking the right set for your retirement planning purposes is where things get a little confusing. And the choice makes no small difference – the future dollars estimate can easily be twice as large as the current dollars value!

The current-dollar estimate helps you understand the value of your future benefit

Your current dollars results illustrate how much your Social Security benefits are worth in today’s dollars or how much you would receive if both your salary and the national wage index remain fixed forever. Therefore, unless you are within a couple years of retirement, this number is far below the actual dollar amount you can reasonably expect to receive.

Put simply, if your current dollar Social Security benefit estimate is $2,000 a month, it means that your actual benefit at the time you retire will be enough to afford what $2,000 a month can afford today.

However, while the current-value estimate seems like a great number to have for your own understanding, it is NOT the number to use for your retirement planning.

Accurate retirement planning using future dollars

Your retirement planning is only as accurate as the projections it makes for all the pieces of your financial reality. Each piece has its own reasonable growth rate:

Estimate Social Security Benefits

The Social Security Administration Made a Mistake

What can you expect during retirement?

Use this calculator to estimate the Social Security benefits you and a spouse will receive at retirement, based on your average annual income, your current age and your age when you retire. For a more accurate and detailed estimate, the Social Security Administration helps you determine your benefits based on your exact earnings history and the exact date of your retirement.

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