4th Quarter 2019

Retiree Corner: How Much Will You Get From Social Security?

How Much Will You Get From Social Security?If you’re counting on Social Security to provide a portion of your income in retirement, it’s important to know how the benefits are calculated and some key decisions you can make that affect the size of your monthly check.

Your benefits are based on your 35 highest-paid years of work. The maximum monthly Social Security benefit for someone retiring at full retirement age in 2020 is $3,011. The payouts are adjusted each year for inflation — the cost of living adjustment (COLA) is 1.6% for 2020.

The benefits calculation is complicated, but the payouts are designed to replace a portion of your average earnings, with a higher percentage for lower-earning workers. The age when you start retirement benefits also affects the amount. The “full retirement age” had been age 65 for a long time, but it has been rising over the past few years. It is age 66 for people who were born from 1943 to 1954, and is gradually increasing by two months every year until it reaches age 67 for people born in 1960 or later.

You can begin retirement benefits as early as age 62 or delay receiving benefits up to age 70, regardless of your full retirement age. Your benefit will be lower if you take benefits early because you will be receiving checks for more years. For example, if you start benefits at age 62, your annual payouts will be reduced as much as 30% for your lifetime. (The specific reduction amount is based on the number of months before your full retirement age.)

See the Social Security Administration’s early retirement page for more information: www.ssa.gov/planners/retire/agereduction.html. On the flip side, every year you delay benefits beyond your full retirement age, your annual benefits will increase by 8% until age 70. Delaying beyond age 70 won’t increase your benefits.

For help estimating your benefits and the impact of taking benefits early or later, see the Social Security Administration’s Benefits Calculators and Online Tools (www.ssa.gov/planners/calculators).

Some public sector employees won’t receive the full amount from Social Security if they work for an employer who doesn’t withhold Social Security taxes from their salary. To find out more about this “windfall elimination provision,” including a calculator to help you estimate the impact on your benefits, see www.ssa.gov/wep.

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