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As you make plans for
your future, one of the questions you should ask is, "How much will
I get from Social Security?" There are several ways you can find
out. Social Security sends a yearly statement to everyone age 25 or older
who has worked under Social Security and does not yet receive benefits.You
should receive a Social
Security Statement every year about three months before your
birthday.
You also can request a statement by calling Social
Security and asking for a form SSA-7004, Request
for Social Security Statement, or by downloading the form at
www.socialsecurity.gov/online/ssa-7004.html
on the Internet. Or, you can calculate your benefit yourself using the
programs available at www.socialsecurity.gov/retire2
on the Internet.
Even with an estimate many people still wonder
exactly how their benefit is figured. Social Security benefits are based
on earnings averaged over most of a worker's lifetime. Your actual earnings
are first adjusted or "indexed" to account for changes in average
wages since the year the earnings were received. Then Social Security
calculates your average indexed monthly earnings during the 35 years in
which you earned the most. It applies a formula to these earnings and
arrive at your basic benefit, or "primary insurance amount"
(PIA). This is the amount you would receive at your full retirement age,
65 or older, depending on your date of birth. This age will increase gradually
each year until it reaches 67 for people born in 1960 or later.
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Factors That Can Raise Or Lower Your Retirement Benefit
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The monthly benefit you
receive from Social Security may not be the basic benefit. Your actual
benefit may be higher or lower than that amount if any of the following
is true.
-
You receive benefits before your full retirement
age.
You can begin to receive Social Security benefits
as early as age 62, but at a reduced rate. Your basic benefit will
be reduced by a certain percent for each month that you receive benefits
before your full retirement age. The closer you are to your full retirement
age when you begin receiving benefits, the greater your benefit amount.
-
You receive cost-of-living increases.
You are eligible for cost-of-living benefit
increases starting with the year you become 62. This is true even
if you don't get benefits until 65 or even 70. Cost-of-living increases
are added to your benefit beginning with the year you reach 62 up
to the year you start getting benefits.
-
You delay your retirement
past your full retirement age.
You may continue working past your full retirement
age and not begin to receive Social Security benefits. If you choose
to do this, your benefit amount will be increased by a certain percent
for each month you are past your full retirement age, but do not receive
benefits. These increases are automatically added to your benefit
until you reach age 70.
-
You are a government worker with a pension.
If you also get or are eligible for a pension
from work where you did not pay Social Security taxes (usually a government
job), a different formula is applied to your average monthly earnings.
To find out how your benefit is figured, contact Social Security and
ask for a copy of The
Windfall Elimination Provision (Publication No. 05-10045).
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Estimating Your Social Security Retirement Benefit
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For Workers Born In 1940
This
worksheet shows how to estimate the Social
Security monthly retirement benefit you would be eligible for at
age 62 if you were born in 1940. It also allows you to estimate
what you would receive at age 65 and 6 months, your full retirement
age, excluding any cost-of-living adjustments for which you may
be eligible. If you continue working past age 62, your additional
earnings could increase your benefit.
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Step
1:
Enter your actual earnings
in Column B, but not more than the amount shown
in Column A. If you have no earnings, enter "0." |
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Step
2:
Multiply the amounts in
Column B by the "index factors" in Column
C, and enter the results in Column D. This gives you your "indexed
earnings," or the approximate value of your earnings in current
dollars. |
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Step
3:
Choose from Column
D the 35 years with the highest amounts. Add these amounts.
|
$__________________ |
Step
4:
Divide the result from
Step 3 by 420 (the number of months in 35 years). Round down to
the next lowest dollar. This will give you your average indexed
monthly earnings. |
$__________________ |
Step
5:
- Multiply the first $592 in Step 4 by 90%.
|
$__________________
|
-
Multiply the amount in Step 4 over $592 and
less than or equal to $3,567 by 32%.
|
$__________________ |
- Multiply the amount in Step 4 over $3,567 by 15%.
|
$__________________ |
Step
6:
Add a, b and c from Step
5. Round down to the next lowest dollar. This is your estimated
monthly retirement benefit at age 65 and 6 months, your full retirement
age. |
$__________________ |
Step 7:
Multiply the amount in
Step 6 by 77.5%. This is your estimated monthly retirement benefit
at age 62. |
$__________________ |
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|
Year |
A. Maximum Earnings |
B. Actual Earnings |
C. Index Factor |
D. Indexed Earnings |
1951 |
$3,600 |
|
11.49 |
|
1952 |
3,600 |
|
10.81 |
|
1953 |
3,600 |
|
10.24 |
|
1954 |
3,600 |
|
10.19 |
|
1955 |
4,200 |
|
9.74
|
|
1956 |
4,200 |
|
9.10 |
|
1957 |
4,200 |
|
8.83 |
|
1958 |
4,200 |
|
8.75 |
|
1959 |
4,800 |
|
8.34 |
|
1960 |
4,800 |
|
8.02 |
|
1961 |
4,800 |
|
7.87 |
|
1962 |
4,800 |
|
7.49 |
|
1963 |
4,800 |
|
7.31 |
|
1964 |
4,800 |
|
7.03 |
|
1965 |
4,800 |
|
6.90 |
|
1966 |
6,600 |
|
6.51 |
|
1967 |
6,600 |
|
6.17 |
|
1968 |
7,800 |
|
5.77 |
|
1969 |
7,800 |
|
5.46 |
|
1970 |
7,800 |
|
5.20 |
|
1971 |
7,800 |
|
4.95 |
|
1972 |
9,000 |
|
4.51 |
|
1973 |
10,800 |
|
4.24 |
|
1974 |
13,200 |
|
4.00 |
|
1975 |
14,100 |
|
3.73 |
|
1976 |
15,300 |
|
3.49 |
|
1977 |
16,500 |
|
3.29 |
|
1978 |
17,700 |
|
3.05 |
|
1979 |
22,900 |
|
2.80 |
|
1980 |
25,900 |
|
2.57 |
|
1981 |
29,700 |
|
2.33 |
|
1982 |
32,400 |
|
2.21 |
|
1983 |
35,700 |
|
2.11 |
|
1984 |
37,800 |
|
1.99 |
|
1985 |
39,600 |
|
1.91 |
|
1986 |
42,000 |
|
1.86 |
|
1987 |
43,800 |
|
1.75 |
|
1988 |
45,000 |
|
1.66 |
|
1989 |
48,000 |
|
1.60 |
|
1990 |
51,300 |
|
1.53 |
|
1991 |
53,400 |
|
1.47 |
|
1992 |
55,500 |
|
1.40 |
|
1993 |
57,600 |
|
1.39 |
|
1994 |
60,600 |
|
1.35 |
|
1995 |
61,200 |
|
1.30 |
|
1996 |
62,700 |
|
1.24 |
|
1997 |
65,400 |
|
1.17 |
|
1998 |
68,400 |
|
1.11 |
|
1999 |
72,600 |
|
1.06 |
|
2000 |
76,200 |
|
1.00 |
|
2001 |
80,400
|
|
1.00
|
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[Return to worksheet]
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