The collecting of social security benefits is a very important part of your retirement. In most cases, American’s have little idea as to how their benefits will be once they reach retirement age. It’s important to know what factors are considered in determining your social security benefits.
The following factors will determine how your benefits will be calculated: earning history, work history, birth year, claiming age, total income, geographical location, and if you are still receiving an income. The Social Security administration (SSA) has a number of tools that can help you get a ball park estimate of you monthly benefit amount.
Social Security Records
The first thing a person should do before using the calculation tool is make sure that their information is accurate. Go to the social security website at www.ssa.gov and set up an account. The SSA will give you a social security overview. Make sure all of the information is correct. The overview will give the user an estimate of what they should be getting at the full retirement age, which is 70. However, many people opt to take their retirement at the age of 62, or 67. If you plan on retiring before 70, you can utilize other tools to help get a better picture of what you may receive.
Benefits Calculation Tools
The tools on the SSA website can easily calculate benefits for retirees at the age of 62, 67, and 70. The SSA retains information regarding your work history to make the correct calculation. The SSA tool will make automatic calculations and provide the best estimate of how much your monthly check will be.
Should You Retire Early?
In most cases, people do not opt for what the SSA refers to as “early retirement” which is the age of 62. Nearly half of retirees do so at the age of 67. It is financially advantageous to retire as late as possible. If you opt to retire at the age of 62, your benefits will undoubtedly be reduced. For instance, if you retire at 62 and receive $1,097 per month, you could theoretically receive some $500 more if you wait until 67. It will be even more if you wait until 70.
Various Calculators for Best Estimate
The SSA also has four different calculators that will give you the best estimate of your future payments with varying degrees of precision: They are as follows:
- SSA Quick Calculator – This is the most basic calculator. If your earnings have been pretty stable over the years, the information can be relied upon in terms of giving the best future payment estimate.
- Online Calculator – This calculator is a bit more sophisticated. However, it does make assumptions about your future income. Actual work history makes the data much more credible.
- Retirement Estimator – This is a great tool if you don’t wish to put in information yourself. It fills in the blanks by accessing earning estimate information retained by the SSA.
- Detailed Calculator – This is a highly sophisticated tool to easily determine retirement income. You can get information about future and past retirement. You can also get other income information.
Remember, you can also call the SSA and get a benefits estimate statement. This provides an easy, fool-proof method of retirement expectations. Although they are mailed out every five years, you can access them at any time by going to your account at the SSA website.
Speak To An SSA Representative
Social security representatives will be more than happy to help you with calculating your monthly benefit. Retirement is a very big step in a person’s life. Plan your retirement around your future monthly payments. It is estimated that at least 3 out of 5 retirees depend on social security for at least half their income. It is advisable that retirees get a full explanation of how certain factors can affect their monthly payments. An SSA representative can offer you an explanation of your future benefits. Additionally, they will address any other concerns you have regarding retirement payments.
Another option, especially if you are a member of AARP is to use their services. They have very informative explanations of social security. You can say if operates as a guide in helping seniors to determine when the best time to retire is. You can find a clear explanation of how the social security calculator works and when and how to determine your best time to retire. If you are able to access the internet, check their website. There you will find clear explanations as to how to estimate your social security benefits.