Determine Your Future Social Security Benefits

Agency provides sample illustrations of retirement benefits keyed to incomes and current ages.

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"Your Social Security Statement" is an annual update on how much you're entitled to in the way of benefits. The Social Security Administration begins mailing this early in your working life. It's a very useful document and a great aid in financial planning. The agency also periodically produces sample benefit calculations that help people understand how much of their retirement needs will be covered by Social Security. 

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A recent set of illustrations from the agency reflects what it calls a "full-lifetime average earnings level"—a person's highest 35 years of earnings, indexed for wage inflation, with the assumption that they survive to at least the age of 65 without becoming disabled. Its samples use full-lifetime averages of $10,000, $20,000, $30,000, $40,000, $50,000, $60,000, and what it calls the "steady maximum" employee, who began working at the age of 22 and earned at least the maximum amount of earnings each year on which Social Security taxes are due (actually, they're called Old Age Survivor and Disability Income taxes).

Then, the agency provides benefits for various age levels and provides annual benefits for these people, which are tied to the various lifetime earnings averages. While people nearing retirement have a good idea of their lifetime earnings, younger workers do not. These illustrations can provide them useful looks at possible benefit levels. 

Because Social Security benefits are indexed for inflation, it's appropriate to look at current price levels and spending needs to determine how much of your future spending needs would be covered by Social Security. For example, if the benefits shown below covered 40 percent of your current spending needs, it's not a stretch to figure that they also would equal about 40 percent of your future spending needs. You need to do some adjusting for a different retirement spending profile. Even with Medicare, your medical expenses might be higher. Your housing expenses might be lower if you've paid down your mortgage. Some experts say you can live on less—70 to 80 percent of your income at retirement is a popular range. A more prudent suggestion is to assume your retirement spending will be 100 percent of its earlier level. If you're wrong, enjoy the windfall! 

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Social Security Benefits

These examples begin with a person's age in 2009 and the benefits they are entitled to when they reach what is called their full retirement age (FRA). For most people, this is 66 or 67 years of age, although some experts support raising the FRA to help reduce projected Social Security deficits and also to acknowledge longer working careers and lifespans. The "Pct" row provides the percentage of fully insured workers in each earnings group. 

Age

Annual Social Security Benefit at Various Full-Lifetime Earnings

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Maximum

25

$8,532

$11,724

$14,928

$18,132

$21,324

$23,760

$30,060

35

$8,532

$11,724

$14,928

$18,132

$21,324

$23,760

$30,108

45

$8,532

$11,724

$14,928

$18,132

$21,324

$23,760

$30,132

55

$8,532

$11,724

$14,928

$18,132

$21,324

$23,760

$30,000

65

$8,172

$11,232

$14,304

$17,376

$20,448

$22,752

$28,140

Pct.

11

15

16

15

12

10

21

Survivorship Benefits

The age column refers to both the age of the deceased spouse in 2009 and the age of the surviving spouse in 2009. The lifetime earnings refers to the deceased spouse's earnings. It is assumed that the deceased spouse died in 2009. Example (1) is for a spouse and one child; example (2) is for one child only; example (3) is for the surviving spouse and two children. 

Age

Annual Survivorship Benefits at Various Full-Lifetime Earnings

 

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Maximum

25

 

 

 

 

 

 

 

(1)

$7,056

$12,792

15,312

17,808

20,328

22,848

44,016

(2)

3,528

6,396

7,656

8,904

10,164

11,424

22,008

(3)

7,056

12,792

15,312

18,420

22,980

27,540

51,384

35

 

 

 

 

 

 

 

(1)

11,568

15,984

20,112

24,240

28,344

32,472

44,016

(2)

5,784

7,992

10,056

12,120

14,172

16,236

22,008

(3)

11,580

15,996

22,572

30,048

34,140

37,896

51,360

45

 

 

 

 

 

 

 

(1)

12,288

16,824

21,360

25,896

30,432

34,224

43,824

(2)

6,144

8,412

10,680

12,948

15,216

17,112

21,912

(3)

12,288

16,838

24,852

31,956

36,012

39,960

51,156

60

 

 

 

 

 

 

 

(1)

5,940

8,184

10,428

12,672

14,916

16,548

20,292

(2)

6,228

8,592

10,944

13,296

15,648

17,364

21,288

(3)

12,468

17,244

25,788

32,568

36,780

40,524

49,692

Pct.

12

15

16

14

13

9

21

There seems to be an immutable Social Security law: the more you say about Social Security, the more questions people have. Please fire away. I'll get answers from Social Security and report on them in a future Best Life. 

[See Your Guide to Social Security, Part One.] 

[See Your Guide to Social Security, Part Two.] 

[See Your Guide to Social Security, Part Three.]