Approximately 90% of retirees receive Social Security benefits, and these monthly checks make up roughly one-third of seniors' retirement income, according to the Social Security Administration. Because Social Security is a vital source of income for millions of retirees, it's a good idea to figure out how much you can expect to receive each month. Although everyone's benefit amount will differ, here's how much the average retiree earning a salary of $50,000 per year can expect to collect.
Estimating your future benefit amount
You become eligible to start claiming benefits once you turn 62 years old, but you won't receive the full benefit amount you're entitled to each month unless you wait until your full retirement age (FRA) to file. For those who will be turning 62 in 2021, your FRA is 66 years and 10 months.
If you have an FRA of 66 years and 10 months and you're currently earning a salary of $50,000 per year, you would be entitled to receive $1,592 per month at your FRA, according to the Social Security Administration.
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If you chose to claim as early as possible at age 62, your monthly payment would be reduced. In this case, you'd receive around $1,075 per month by claiming at 62.
By waiting a few years to begin claiming, though, you'd receive higher monthly payments. If you waited until age 70 to file, you'd receive $2,081 per month in this scenario.
Keep in mind, too, that your benefit amount could differ depending on your salary and how many years you've worked. The Social Security Administration averages your income over your 35 highest-earning working years, so if you don't work that long, your benefit amount will be lower.
Deciding when to begin claiming
Knowing your benefit amount at your FRA is only one-half of the equation. It's just as important to decide at what age you should file for benefits, because that will have an enormous impact on the amount you actually collect each month.
Claiming early can be a wise move if you have abundant savings and don't necessarily need the extra cash you'd receive by delaying benefits. It can also be a good choice for those who don't expect to spend many years in retirement. If you're battling health issues, for example, claiming early can help you enjoy your money for as many years as possible.
On the other hand, delaying benefits can also be a smart decision, in some cases. If you don't have much saved in your retirement fund and need all the extra income you can get, the higher payments you'll receive by delaying benefits can be immensely helpful. In addition, if you were planning on continuing to work into your late 60s or early 70s anyway, you might as well hold off on claiming benefits to earn those fatter checks.
If you can't decide when to claim, you might opt to file at your FRA. Your FRA is a good middle-ground option between claiming early and delaying. Your benefits won't be reduced, but you also won't need to wait until age 70 to start collecting your checks.
Social Security benefits can go a long way toward making ends meet in retirement, so it's wise to ensure you know what to expect. By determining your benefit amount and then deciding the best age to begin claiming, you can make the most of your monthly checks.
