Suppose you were born on Jan. 1, 1960, and had an average annual income of $50,000. As of May 2023, you would get a monthly benefit of $1,386 if you filed for Social Security at 62; $1,980 at full retirement age (in this case, 67); or $2,455 at 70.
(It will settle at 67 for people born in 1960 or later.) If you can wait until 70 to start collecting, you'll receive your maximum monthly benefit. A single person born in 1968 who has averaged a $50,000 salary, for example, would get $1,410 a month by retiring at 62, the earliest age to start collecting.
You may need more than $37,500 to live the retirement life you're looking forward to. Here's how much you'll need to have put away (in investments, personal savings, and guaranteed income like Social Security, a pension, or an annuity) if you'd prefer to have more money in retirement.
This means their monthly Social Security benefit will be $1,886. If your work history shows that you had higher earnings in prior years, that could increase your benefit. Your spouse and children may also qualify for disability benefits of $900 a month.
You get 90% of the first $885 in average indexed monthly earnings. That works out to $796.50. Then, you get 32% of the amount up to $5,336 per month. In this example, that takes care of the remaining $2,448, and 32% of that amount is $783.36.
If you earned around $50,000 per year before retirement, the odds are good that a $300,000 retirement account and Social Security benefits will allow you to continue enjoying your same lifestyle. By age 55 the median American household has about $120,000 saved for retirement, and about $212,500 in net worth.
If you earn $75,000 per year, you can expect to receive $2,358 per month -- or about $28,300 annually -- from Social Security.
Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
We: Base Social Security benefits on your lifetime earnings. Adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Calculate your average indexed monthly earnings during the 35 years in which you earned the most.
While you may have heard at some point that Social Security is no longer taxable after 70 or some other age, this isn't the case. In reality, Social Security is taxed at any age if your income exceeds a certain level.
Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.
And although some may agree that millionaires or billionaires don't need the extra income after they pass the Social Security age of eligibility, the very wealthy are still eligible for Social Security benefits if they have paid into the Social Security system through payroll taxes during their working years.
The maximum monthly Social Security benefit this year is $4,555. That's over $54,000 a year. But if you have $20 million in assets going into retirement, then it probably doesn't matter whether you end up getting the maximum benefit Social Security will pay or a smaller one.
Still, your starting Social Security benefit is higher. That's how the government encourages people to postpone starting their benefits. Here's the starting benefit for each of those same final annual incomes, if you wait until age 70: Final pay of $80,000: benefit of $2,433 monthly, $29,196 yearly.
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
Therefore, if you retire at full retirement age, which is 66 and two months for someone turning 62 next year, then you'll get about $1,030 as your monthly benefit. Notice something important about the result. Social Security does a reasonably good job of replacing work income for low-income individuals.
What is the average and median retirement savings? The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.
If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
Bottom line. Current workers will still receive Social Security benefits after the trust fund's reserves become depleted in 2034, but it's possible that future retirees will only receive 78% of their full benefits unless Congress acts.
As the CEPR noted in a recent blog, 94% of U.S. workers are paid less than $160,200 per year, so they pay the 6.2% Social Security payroll tax on all of the paychecks they receive in 2023. For millionaires, only about 1% or less of their total earnings go toward Social Security.
You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefits. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.
No waiting period is required if you were previously entitled to disability benefits or to a period of disability under § 404.320 any time within 5 years of the month you again became disabled.