Do you have any idea of how much Social Security Retirement Benefits you could get? Not many people know, so find out!
If you’ve reached retirement, Social Security benefits might provide a significant portion of your income. In 2024, approximately 68 million Americans will receive Social Security benefits, with an average monthly payment of $1,918 for retired workers, amounting to about $1.5 trillion in total annual payments.
According to recent research by the National Institute on Retirement Security (NIRS), only 11% of non-retired Americans know exactly how much they will receive in benefits. The study, which surveyed over 1,200 individuals aged 25 and older, found that 24% are unsure about their expected benefits, and 22% have no idea at all.
It’s crucial to start estimating your Social Security benefits, even if you’re not close to retirement. The Social Security Administration (SSA) provides detailed statements to help individuals understand their future benefits. Anyone aged 18 and older can check their benefits by creating a “My Social Security” account online. Those aged 60 and above, who may not use online accounts, will receive paper statements by mail. Additionally, paper statements can be requested by anyone.
“Workers can go to the Social Security Administration website and log into their own account and receive an estimate of their future benefit amounts. Most workers seem not to have done that and don’t seem to have a good sense of what they will get personally from Social Security”, said Tyler Bond, research director at NIRS, during a Tuesday presentation of the firm’s research.
What Are Social Security Retirement Benefits?
They are a monthly payment made to retirees to help them maintain their standard of living. The amount of the benefit is based on your average indexed monthly earnings (AIME) over a maximum of 35 years of work. In simpler terms, the more you earn and the longer you work, the higher your retirement benefit will be.
When Are Social Security Benefits Paid?
You can start receiving Social Security benefits as early as age 62, but if you do, your monthly benefit will be reduced. You can receive your full benefit amount at your full retirement age (FRA), which is 67 for people born in 1960 or later. If you wait to retire past your FRA, your monthly benefit will be increased to account for the delayed retirement.
What Is The Minimum and Maximum US Social Security Benefit?
There is a minimum number of credits you need to earn to qualify for Social Security special minimum benefits. In 2024, you need to have at least 11 years of work to qualify and you would earn about $50.90 monthly.
On the other hand, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
How Much Social Security Retirement Benefits Will I Get?
The exact amount of your Social Security retirement benefits will depend on your average indexed monthly earnings (AIME). The Social Security Administration offers a retirement benefits calculator on their website. Here’s a simplified explanation of how it works:
- Social Security Administration calculates your AIME: this is done by averaging your indexed monthly earnings over a maximum of 35 years of work;
- Primary Insurance Amount (PIA) is calculated: a formula is applied to your AIME to determine your PIA. This formula considers three separate percentages based on specific dollar amounts;
- Benefit is adjusted based on retirement age: if you retire before your full retirement age (FRA), your benefit will be reduced. Conversely, if you retire after your FRA, your benefit will be increased.
CHECK OUT SSA’S ONLINE BENEFITS CALCULATOR
Why Is Important To Check Your Social Security Statement?
It’s especially important to see how annual cost-of-living adjustments (COLA) affect your monthly payments. Even younger workers can benefit from understanding what kind of living standard Social Security might provide based on their current wages and inflation adjustments.
For instance, if you’re earning $6,000 a month now, and your estimated Social Security benefit is $2,000 monthly, Social Security would replace about one-third of your pre-retirement income. However, these estimates can change over time, especially if your work history is less than 35 years or if your wages increase, as noted by Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company.
“The closer someone is to age 62, the more accurate it is”, said Jim Blair, vice president of Premier Social Security Consulting and a former Social Security administrator.
So, it’s also crucial to review your statements regularly as well to ensure your earnings history is accurately recorded. Errors can occur, and correcting them promptly is easier than waiting. If you find discrepancies, you can visit your local SSA office with your W-2 form or other proof of income, such as tax returns or pay stubs, to correct your earnings record.