[tp widget="default/tpw_default.php"]

how does social security figure your payment

how does social security figure your payment插图

Key TakeawaysYour Social Security benefit is decided based on your lifetime earnings and the age when you retire and begin taking payments.Your lifetime earnings are converted to a monthly average based on the 35 years in which you earned the most,adjusted for inflation.Those earnings are converted to a monthly insurance payment based on your full retirement age.More items

Should you take Social Security at age 62 or 70?

You can start taking it as early as age 62 (or earlier if you are a survivor of another Social Security claimant or on disability), wait until you’ve reached full retirement age or even until age 70.

Should you start Social Security at age 62?

There’s little question that taking Social Security at 62 is not always a good deal. You lock in lower benefits for the rest of your life. You can reap a higher benefit at “full” retirement age — from 66-67 depending on when you were born — and the highest-possible benefit at age 70. Social Security will pay you more for waiting.

How do you calculate social security payment?

? Calculate your average indexed monthly earnings during the 35 years in which you earned the most. ? 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.

Does working past age 70 affect your Social Security benefits?

Working past age 70 (or any time past your full retirement age, in fact) won’t affect your benefits. And while you won’t increase your monthly benefit by waiting past age 70 to claim, you could boost it by working in addition to collecting Social Security.

What is the effect of Social Security on lower income earners?

The effect of these calculations is that a Social Security benefit "replaces" more of the income of lower-wage earners than it does for higher-wage earners. The effect is to help level the playing field in retirement between workers of different income levels.

How much is Medicare tax?

That tax is 6.2 percent of your wages up to a ceiling ($127,200 in 2017). Plus, your employer matches the 6.2 percent payment for a total of 12.4 percent of your wages. (You also pay 1.45 percent of your wages, with an employer match, for Medicare. And if you earn more than $200,000 a year, you’ll pay an additional 0.9 percent Medicare tax — as part of the Affordable Care Act.)

What percentage of a spouse’s Social Security benefit is a PIA?

If you’re married, the PIA will also figure in any benefit amount that your spouse would be due, generally 50 percent of your PIA if the spouse turns on the tap at full retirement age. The PIA is also the basis of a survivor’s benefit and a child’s benefit.

How many years of work do you have to work to get Social Security?

It starts with Social Security examining your earnings history — with an emphasis on the money you earned during your 35 highest-paid years. That means that if you worked 40 years, Social Security would use your highest-paid 35 years in its calculations and ignore the other five.

What is the purpose of the salary calculation?

The purpose of the calculation is to adjust your career earnings to reflect the changes in general wage levels that took place during the years of your career . The job that paid you, say, a $300 monthly income 40 years ago, would yield quite a bit more today.

How much do you need to earn to qualify for retirement?

To even be eligible for retirement benefits, you generally need 10 years (40 quarters) of gainful employment. In 2017, you need to earn at least $1,300 in a quarter for it to count as a credit.

What does Social Security say about adjustments?

Social Security says that the adjustments "ensure that a worker’s future benefits reflect the general rise in the standard of living that occurred during his or her working lifetime."

What is the AIME amount for 2021?

For example, a person who had maximum-taxable earnings in each year since age 22, and who retires at age 62 in 2021, would have an AIME equal to $11,098. Based on this AIME amount and the bend points $996 and $6,002, the PIA would equal $3,262.70. This person would receive a reduced benefit based on the $3,262.70 PIA.

How many years of earnings are needed to calculate average indexed monthly earnings?

Up to 35 years of earnings are needed to compute average indexed monthly earnings. After we determine the number of years, we choose those years with the highest indexed earnings, sum such indexed earnings, and divide the total amount by the total number of months in those years. We then round the resulting average amount down to the next lower dollar amount. The result is the AIME .

How is Social Security calculated?

Social Security benefits are typically computed using "average indexed monthly earnings.". This average summarizes up to 35 years of a worker’s indexed earnings. We apply a formula to this average to compute the primary insurance amount ( PIA ). The PIA is the basis for the benefits that are paid to an individual.

Can you get higher PIA than PIA?

Benefits can be higher than the PIA if one retires after the normal retirement age. The credit given for delayed retirement will gradually reach 8 percent per year for those born after 1942. A table illustrates the complex interaction among normal retirement age, actuarial reduction, and delayed retirement credit.

Is a person entitled to a PIA before 62?

We pay reduced benefits to one who retires before his/her normal retirement age. A person cannot collect retirement benefits before age 62.

Can disability benefits be reduced?

In such cases, disability benefits are redetermined triennially. Benefits to family members may be limited by a family maximum benefit.

Can family members limit benefits?

Benefits to family members may be limited by a family maximum benefit.

How does Social Security calculate AIME?

They use the sum of the top 35 years of indexed earnings, divide that number by 35 for the annual average, and then they divide that number by 12 for the monthly average. This is your AIME.

How does Social Security calculate monthly benefits?

The Social Security Administration calculates your monthly benefits based on your lifetime earnings. Using that number, they index (adjust) those earnings for external changes like inflation. The number they come up with is called the average indexed monthly earnings.

What is a PIA?

The PIA is calculated with the formula in effect for the year retirees turn 62. Even if retirees start getting their benefits at 66 years old, the formula for them is that which was in effect when they were 62. Your PIA is the monthly benefit that you will get at your full retirement age.

What is the PIA age?

Your PIA is the monthly benefit that you will get at your full retirement age. If you choose to retire before your full retirement age, your benefits are permanently reduced. The percentage of reduction depends on your age at the time of retirement. Age 62 is the youngest that you can begin getting Social Security benefits.

What is the benefit estimate?

Benefit estimates depend on your date of birth and on your earnings history. For security, the "Quick Calculator" does not access your earnings record; instead, it will estimate your earnings based on information you provide. So benefit estimates made by the Quick Calculator are rough. Although the "Quick Calculator" makes an initial assumption …

How many retirement estimates does Quick Calculator give?

If you do not give a retirement date and if you have not reached your normal (or full) retirement age, the Quick Calculator will give benefit estimates for three different retirement ages.

Why are retirement benefits unreliable?

Lack of a substantial earnings history will cause retirement benefit estimates to be unreliable.

What does "0" mean in retirement?

If you entered 0, we assume you are now retired. Enter the last year in which you had covered earnings and the amount of such earnings.

How old do you have to be to use Quick Calculator?

You must be at least age 22 to use the form at right.

Related Post