Many older adults rely on Social Security benefits to some extent during retirement, so it pays to maximize your benefits.
Each person’s benefit amount will vary slightly, as it is largely determined by their work history and income. Knowing how much the average retiree receives, on the other hand, can make planning for the future easier in some cases.
However, how much Social Security are you expected to receive? And how does that compare to the average retiree’s situation? Here’s how to determine that.
How to calculate the amount of your future benefit
Even if you’re years away from retirement, you can obtain an accurate estimate of the amount of Social Security benefits you’re expected to receive.
To begin, you’ll need to create an online account with mySocialSecurity. This will provide you with access to your Social Security statements, which will include an estimate of your benefit amount based on your actual earnings over the course of your career.
Bear in mind that this benefit amount may vary slightly based on the number of years you work and the amount of income you earn during that time.
Additionally, this estimated benefit amount is based on the assumption that you will claim at full retirement age (FRA). If you file before or after that age, the amount you receive each month will be reduced.
How does the amount of your benefit compare to the national average?
Again, each individual’s benefit amount will vary slightly. However, the Social Security Administration projects that the average retiree will receive around $1,657 per month in 2022.
If your monthly payments fall short of the national average, there are several ways to boost your benefits.
For starters, you could consider delaying your Social Security claim for a few years. You can begin claiming benefits as early as age 62, but if you wait until your FRA – which is either 66, 67, or somewhere in between, depending on your birth year – you will earn the full benefit amount based on your work history. By waiting until after your FRA (up to the age of 70), you will receive a monthly bonus in addition to your full benefit amount.
Working an additional couple of years may also result in increased payments. The Social Security Administration determines your benefit amount by averaging your wages over your career’s 35 highest-earning years. The longer you work (and earn), the greater your benefit amount may be.
Utilizing Social Security to the fullest extent possible
Knowing how your benefit amount compares to that of the average retiree can aid in retirement planning. However, it is critical to ascertain the extent to which you can realistically rely on Social Security benefits.
Social Security benefits are only intended to replace approximately 40% of your income prior to retirement. When you know roughly how much you’ll receive, determining how much of your income will be replaced by Social Security and how much you’ll need to save on your own becomes easier.
For many retirees, Social Security is a critical source of income, and a little planning can go a long way. By determining the amount of benefits you can expect, you can ensure that you’re as prepared as possible for retirement.