Social Security is a federal program that provides income to retired individuals. It is important to understand how much you can expect to receive from Social Security when you reach the age of 65. Calculating your Social Security benefits can help you plan for your retirement.
Calculating Social Security Benefits
The amount of Social Security benefits you will receive is based on your earnings throughout your working career. The Social Security Administration (SSA) will look at your highest 35 years of earnings and calculate your average indexed monthly earnings (AIME). This calculation will be used to determine your primary insurance amount (PIA). Your PIA is the amount you will receive monthly from Social Security.
The SSA also takes into consideration any credits you have earned based on your age and years of work. If you are eligible for Social Security benefits, you will receive a statement from the SSA that outlines your estimated benefits.
Age 65 and Beyond
Once you reach the age of 65, you are eligible to receive Social Security benefits. The amount you will receive will depend on your PIA and any credits you have earned. Your Social Security benefits can also be affected by whether you are married or not.
If you are married and you are the higher earner, you may be eligible to receive a spousal benefit. This spousal benefit is based on your spouse’s earnings record and can be up to 50% of their primary insurance amount.
Your Social Security benefits will also be affected by when you choose to start collecting. If you choose to start collecting benefits before you reach the full retirement age of 66, your benefits will be reduced. If you wait until after you reach the full retirement age of 66, your benefits will be increased.
Understanding how much you will receive from Social Security when you reach the age of 65 is important for retirement planning. By calculating your Social Security benefits and taking into account any credits you have earned, you can get a better understanding of what you can expect to receive.
Retirement may be one of the most anticipated life events for many Americans, but the complexity of social security can make the path towards qualifying for your benefits more convoluted than expected. With reports estimating that Social Security benefits make up one-third of the median retirement income for those aged 65 and older, it is more important than ever to understand your contributions to date, expectations for the future, and how to estimate what you may receive from social security.
Social Security is a highly progressive system of benefits and depends on your average lifetime earnings. Those earning low wages during their working years will receive a higher percentage of their former salary than those with higher wages. This is because the Social Security benefits offered are determined in part by how much income was earned over the course of one’s career and how much was paid into the system through regular payroll tax deductions.
When it comes to understanding what you can expect to receive from Social Security at age 65, the best place to start is by obtaining a free copy of your Social Security statement. This statement contains the projected benefits you are expected to receive at age 65, estimated based off of your current earnings and taxable income over your lifetime. Your statement also includes your estimated Medicare premiums, which must be paid to receive Social Security benefits. This information can also be found online at the Social Security Administration’s website.
Once you have a good estimate of what you can expect to receive at age 65, it is important to note that these payments can be adjusted due to increases or decreases in inflation, or earned interest over time. Additionally, the age at which you begin claiming benefits can also affect the amount you will receive; those who claim benefits at a younger age will receive smaller payments than those who wait until age 65 or later.
Social security can be complicated, but understanding your anticipated benefits is critical to ensuring you get what you deserve when you retire. Taking the time to review your Social Security statement and researching the payment structures offered by the Social Security Administration can help you make the best decisions for your retirement.
