Home News Here’s How Anyone Can Calculate Estimated Social Security Benefits

Here’s How Anyone Can Calculate Estimated Social Security Benefits

Blank Social Security checks run through a printer at the U.S. Treasury printing facility

Blank Social Security checks run through a printer at the U.S. Treasury printing facility Blank Social Security checks run through a printer at the U.S. Treasury printing facility. What will your Social Security benefits add up to? | William Thomas Cain/Getty Images

Retirement is just around the corner. Even if you’re in your 20s or 30s, you should be planning for your post-work life and saving accordingly. It can be hard, as there are other things that require your attention, such as mortgages, children, and student loans. But the reality is most of us aren’t going to be able to rely on the Social Security system alone to get through our golden years.

And because of that, you’ll need to know what to stash away for the future. That requires some tools.

Calculating your Social Security benefits

The process of calculating your benefits isn’t exactly straightforward. There are numerous factors and variables in the mix, and each individual’s eventual payout will be different from the next. If you plan on relying mostly or solely on Social Security after retiring, you don’t want to guess at what to expect. You need to have a very good idea of what your financial situation will look like.

In order to get there, you need to know what those factors and variables are that will determine how much you get. According to the Social Security Administration, the most important element in the calculation is your lifetime earnings. From there, a formula is applied:

“We adjust or ‘index’ your actual earnings to account for changes in average wages since the year the earnings were received. Then, Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most,” the SSA website said. “We apply a formula to these earnings and arrive at your basic benefit, or ‘primary insurance amount.’ This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth.”

A few things that can change your benefits:

  • Signing up before full retirement age
  • Eligibility for cost-of-living benefits
  • Waiting past full retirement age (up to age 70)
  • Are or were a government worker with a pension

Now, on to the 10 tools that can help you get into the specifics. Which tool is best for you?

1. Determine what you’ll need with the Retirement Estimator

The Social Security Administration has a tool called the Retirement Estimator that will crank out an estimate based on your actual earnings history. Everyone has a record with the IRS and SSA, and by digging into that data, the estimator can give you a ballpark figure as to what you can expect. This isn’t available for everyone, however, as you’ll need to have enough Social Security credits to qualify for benefits.

But if you want to dig deeper, you can start using these calculators …

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