Social Security: A Simple Way to Calculate Your Exact Benefits

Curious how your Social Security benefits are determined? Motley Fool contributor John Maxfield explains.

May 12, 2014 at 2:17PM

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Wondering how much you'll collect in Social Security benefits? Regardless of how old you are, calculating your expected monthly payout is both easy and important.

Although the process seems shrouded in mystery and accessible only to someone with an advanced mathematics degree, the truth is that the Social Security Administration makes it relatively simple for prospective retirees to learn how much they'll receive each month in benefits.

The most direct way to determine this is to use the SSA's official Retirement Estimator. This references your actual earnings history and spits out three different estimates: one that applies at your full retirement age, a second that factors in your delayed retirement credit, and a third that assumes you apply for benefits at the earliest possible time.

This approach may be challenging if you're still young and expect your income to continue climbing. In this case, it's helpful to know roughly how your benefit is calculated. To discover where these figures come from, check out the video below, in which Motley Fool contributor John Maxfield explains the math behind your Social Security benefits.

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