Most retirees receive Social Security benefits, but the size of the checks they get may come as a surprise. Whether you're retiring and claiming benefits for the first time next year or you are already getting income from the Social Security Administration, it can be helpful to know what the average benefit is -- and how yours compares.
So, will your benefits beat out those received by the typical American in 2022, or will you get more or less money than your peers? Here's what you need to know to find out.
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What will your Social Security benefit be in 2022?
To find out how your benefits will compare to next year's average, you'll have to calculate how much income Social Security will provide to you next year.
If you're already getting benefits, this is easy. Seniors are on track to get a 5.9% Social Security raise next year thanks to the largest cost of living adjustment (COLA) in decades. So, multiply your current benefit by 5.9%. If you're currently receiving $1,500 and next year you get a 5.9% increase, your benefit will go up to $1,588.50. Of course, you may not get to bring all this extra money home because Medicare premiums will probably be deducted from it. But that would still be the full amount of your check once the COLA kicks in.
If you haven't started benefits yet but are planning to in 2022, your benefit will be based on your career earnings history as well as how old you'll be when filing for benefits. Sign in to your mySocialSecurity account, use the pull-down menu to specify the age you'll claim benefits, and you can see exactly what your benefit will be in 2022.
How does it stack up against next year's average benefit?
Once you know your own benefit, you'll need to know the average benefit for 2022 to see how you stack up to your peers.
The average benefit for all retired workers in 2022 will be $1,657 per month. That's a $92 increase from the $1,565 average benefit in 2021. The COLA mentioned above is the reason the average benefit is going up next year.
If your benefit next year is below the 2022 average, or is projected to be, this may be because your earnings were below average during your career, because you didn't work for 35 years or more, or because you claimed benefits early and were hit with early filing penalties. An above-average benefit, on the other hand, may be explained by a higher salary history or a delayed benefit claim.
Regardless of how high above average your benefit is, though, chances are good it's not nearly enough to live on by itself. Social Security only replaces about 40% of pre-retirement income, while most people need a replacement rate of 80% or more. So, even if you anticipate beating the average, you should be prepared with plenty of supplementary savings to ensure that you can enjoy the quality of life you deserve as a retiree.
