Despite all the uncertainty surrounding the future of the Federal Social Security program, most of us still count on being able to receive some type of Social Security benefit when we retire. While it would be unwise to rely on receiving any specific dollar amount each month in benefits – since benefit calculations may very well change in the future – it’s still useful to take a look at what you might expect to receive.
Having a general idea of your likely Social Security benefits might make it easier for you to calculate the other aspects your retirement savings plan. Just be sure not to absolutely count on receiving Social Security, and don’t forego your own retirement saving in reliance on these numbers, especially if you are under 40 years old.
Here’s some retirement advice on the factors that play in to how much you may receive in social security benefits.
When Will You Retire? One key factor in determining the amount you can expect to receive in Social Security retirement benefits is the age at which you retire. Under current law, you first become eligible to draw Social Security benefits when you reach age 62. But your “full retirement age” will be between age 65 and 67, depending on when you were born. If you elect to receive benefits before your full retirement age, then you’ll receive a lesser amount for the duration of your retirement. On the other hand, if you delay taking Social Security benefits past your full retirement age (up to age 70), then you’ll receive a higher amount throughout your retirement.
How Much Have You Earned? Your future Social Security benefits will depend on the amounts you earned and paid Social Security taxes on over the course of your lifetime. Your earnings are evaluated on the basis of “credits.” You receive a credit for earning a particular amount wages or salary each year, and you can earn up to a maximum of four credits per year. You need to accumulate a minimum of 40 credits over the course of your working years in order to be eligible to receive benefits based on your own work history.
Possible Spousal Benefits. Even if you’ve never paid Social Security taxes directly, or if you haven’t earned enough credits to qualify for Social Security benefits based on your own employment history, you may be able to claim benefits based on your spouse’s record. Under current law, if your spouse has already filed for Social Security benefits then you’ll be eligible to file a spousal claim and receive up to one-half of their benefit amount. You can also receive the spousal benefit even if you are now divorced, so long as you were married for at least ten years before getting divorced.
Maximum Benefit Amount. The maximum benefit depends on the factors above, and is also adjusted over time. For a worker who retires in 2012 at age 66, the maximum monthly amount they can receive is $2,513. Note that this figure is based on earnings at the maximum taxable amount for every year after age 21, but that it would be even higher if the retiree delayed retirement until age 70.
It’s helpful to have a general idea of how much you should be eligible to receive in Social Security benefits when you retire. But make sure you’re doing your own retirement savings as well.
Tags: retirement advice, retirement planning, social security, social security benefit
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Despite all the uncertainty surrounding the future of the Federal Social Security program, most of us still count on being able to receive some type of Social Security benefit when we retire. While it would be unwise to rely on receiving any specific dollar amount each month in benefits – since benefit calculations may very well change in the future – it’s still useful to take a look at what you might expect to receive.
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