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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.
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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.
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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.
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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.
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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 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 1941
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 1941. It also allows
you to estimate what you would receive at age 65 and 8 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.
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$__________________ |
Step 4:
Divide the result from
Step 3 by 420 (the number of months in 35 years). Round down to
the next lowest dollar. This will give you your average indexed
monthly earnings.
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$__________________ |
Step 5:
- Multiply the first $606 in Step 4 by 90%.
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$__________________
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Multiply the amount in Step 4 over $606 and
less than or equal to $3,653 by 32%.
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$__________________ |
- Multiply the amount in Step 4 over $3,653 by 15%.
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$__________________ |
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 8 months, your full retirement
age.
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$__________________ |
Step 7:
Multiply the amount in
Step 6 by 76.7%. This is your estimated monthly retirement benefit
at age 62.
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$__________________ |
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Year |
A. Maximum Earnings
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B. Actual Earnings
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C. Index Factor
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D. Indexed Earnings
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1951 |
$3,600
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11.76
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1952 |
3,600
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11.07
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1953 |
3,600
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10.49
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1954 |
3,600
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10.43
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1955 |
4,200
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9.97
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1956 |
4,200
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9.32
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1957 |
4,200
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9.04
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1958 |
4,200
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8.96
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1959 |
4,800
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8.54
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1960 |
4,800
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8.22
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1961 |
4,800
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8.06
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1962 |
4,800
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7.67
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1963 |
4,800
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7.49
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1964 |
4,800
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7.19
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1965 |
4,800
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7.07
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1966 |
6,600
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6.67
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1967 |
6,600
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6.31
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1968 |
7,800
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5.91
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1969 |
7,800
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5.59
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1970 |
7,800
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5.32
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1971 |
7,800
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5.07
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1972 |
9,000
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4.61
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1973 |
10,800
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4.34
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1974 |
13,200
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4.10
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1975 |
14,100
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3.81
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1976 |
15,300
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3.57
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1977 |
16,500
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3.37
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1978 |
17,700
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3.12
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1979 |
22,900
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2.87
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1980 |
25,900
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2.63
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1981 |
29,700
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2.39
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1982 |
32,400
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2.27
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1983 |
35,700
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2.16
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1984 |
37,800
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2.04
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1985 |
39,600
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1.96
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1986 |
42,000
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1.90
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1987 |
43,800
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1.79
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1988 |
45,000
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1.70
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1989 |
48,000
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1.64
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1990 |
51,300
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1.57
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1991 |
53,400
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1.51
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1992 |
55,500
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1.44
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1993 |
57,600
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1.42
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1994 |
60,600
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1.39
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1995 |
61,200
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1.33
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1996 |
62,700
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1.27
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1997 |
65,400
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1.20
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1998 |
68,400
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1.14
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1999 |
72,600
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1.08
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2000 |
76,200
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|
1.02
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2001 |
80,400
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|
1.00
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2002 |
84,900
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|
1.00
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[Return to worksheet]
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