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How to Estimate Your Future Social Security Benefit

By Katie Brockman – Sep 22, 2020 at 8:15AM

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Knowing how much you'll receive can make retirement planning much easier.

Nearly half (49%) of baby boomers expect to rely on Social Security benefits as their primary source of income in retirement, according to a survey from American Advisors Group, a reverse-mortgage lender.

Because Social Security benefits could potentially make or break your retirement, it's crucial to maximize them. That begins with knowing how much you can expect to receive, because it's tough to plan for retirement if you don't know what your future monthly checks will look like.

Fortunately, there's a simple way to determine your future benefit amount, and knowing this information can make retirement planning much easier.

Social Security card with bills and coins

Image source: Getty Images.

Estimating your Social Security benefit

How much you'll receive from Social Security depends on your work history and how much you're earning. To see how much you can expect to collect, check your Social Security statements online by creating a mySocialSecurity account.

In the past, the Social Security Administration (SSA) mailed out paper statements. But most workers no longer receive these, so for many people, the only way to check their benefit amount is to create an online account.

Your online statements will give you an estimate of your future benefit amount based on your real earnings, making them an invaluable retirement-planning tool. That said, approximately 57% of Americans don't check their online statements, according to the SSA.

Your future benefit amount isn't set in stone, though, and there are ways to change how much you'll receive. In some cases, you may be able to collect hundreds of dollars more per month by adjusting your Social Security strategy.

Maximizing your monthly checks

Several factors affect how much you receive in benefits each month: how many years you've worked, your earnings during those years, and the age you begin claiming benefits.

To calculate your benefit amount, the SSA takes an average of your income over the 35 highest-earning years of your career, then adjusts it for inflation. If you haven't worked a full 35 years before you begin claiming benefits, you'll have zeros added to your earnings average to account for the time you weren't working, which will lower your benefit amount.

So if you want to earn as much as possible in benefits, you should work at least 35 years. Increasing your income can also result in larger monthly checks because the more you earn each year, the higher your earnings average will be.

Finally, the age you begin claiming has a significant impact on how much you collect each month in benefits. When you check your statements online, your estimated benefit amount is the amount you'll collect if you begin claiming at your full retirement age (FRA) -- which is either age 66, 66 and a certain number of months, or 67, depending on the year you were born.

If you claim before your FRA (you can do so as early as 62), your benefits will be reduced by up to 30%. On the other hand, if you wait until after your FRA to begin claiming (up to 70), you'll receive your full benefit amount plus up to 32% extra each month.

Creating a Social Security strategy

Because Social Security benefits will likely be an important part of your retirement plan, it's vital to ensure you make the most of them. By checking your benefit amount online and then taking steps to boost it, you can collect more and enjoy a more comfortable retirement.

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