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3 Things That Determine How Much Money You Get From Social Security

By Maurie Backman – Sep 17, 2019 at 6:36AM

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Want to know what goes into your benefits? Here's your answer.

Millions of seniors rely on Social Security to pay the bills in retirement. If you expect to do the same, it helps to know how those benefits are calculated and how much money you can look forward to. Here are three major factors that come together to determine what your monthly payments ultimately look like.

1. The number of years you work

Your Social Security benefits are based on your highest-paid 35 years on the job. This means that if you work for 45 years during your career, your lowest-paid 10 years won't be factored into your benefits equation. On the other hand, if you don't work a full 35 years, you'll have a $0 factored in for each year without an income.

Older man smiling and holding dog


If you're nearing the end of your career and see that you've worked for less than 35 years (say, you took time off to raise children), it could pay to delay retirement for a year or two. Doing so will help you replace a few $0 years with an actual income, thereby resulting in a higher benefit for life.

2. Your earnings during your career

The more you earn during your career, the higher your benefits stand to be. That's why it pays to fight for raises whenever you can, or pursue more lucrative job opportunities when they arise.

If you're a higher earner, however, then there will come a point when your raises won't matter. Social Security taxes are capped at a certain income level that changes from year to year. Currently, that threshold is $132,900, which means that if you earn $150,000 this year, only your first $132,900 will count for Social Security purposes.

3. The age when you file for benefits

The Social Security Administration (SSA) allows you to start collecting benefits as early as age 62. However, you're not entitled to the full monthly benefit your earnings history entitles you to until you reach what's known as full retirement age, or FRA. FRA is based on your year of birth, as follows:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months




For each month you claim benefits ahead of FRA, they'll be reduced on what's generally a lifelong basis. The highest reduction you can face is 30%, which would apply if you file at 62 with an FRA of 67.

There's also the option to hold off on claiming benefits past FRA. For each year you wait, you'll rack up delayed retirement credits that boost your benefits by 8% a year. Once you turn 70, however, these credits cease to accrue, so there's no sense in delaying benefits past that point.

Keep in mind that if your health is poor, and you don't expect to live a long life, it's generally best to file for benefits on the early side. While doing so will reduce your income on a monthly basis, it could help you get a higher payout from Social Security on a lifetime basis.

Understanding how your benefits are calculated can help you make the most of Social Security. Still, if you really want to figure out how much income to expect from the program, create an account on the SSA's website and access your annual earnings statements, which estimate your benefits based on your income to date. Of course, the younger you are, the less accurate these estimates will be, but they'll give you some idea as to how much money you could eventually be looking at.

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