How Are Social Security Benefits Calculated? A Few Things & Factors Having Effect On The Benefits
One of the most popular Social Security questions that I hear from baby boomers getting prepared for retire is "how are Social Security benefits calculated?" This is a vital question since it could affect how long you require to work, whether you should continue to work during your retirement years, or other aspects of your retirement plan.
Firstly, please note that you receive a Social Security retirement benefit estimate each year in the mail, normally near your birth date. There're also a few calculators available on the Social Security website to help you estimate how much your retirement benefits will be, so you do not need to know how to calculate the benefit yourself.
It is still useful to know how Social Security is calculated, but, so here are the principles:
Basically, your top 35 years of earnings are indexed for inflation, then averaged to figure out the basis for your monthly benefit. If you worked lower than 35 years, the missing years will be calculated as nothing for purposes of determining your benefit amount.
Planning suggestion: If you've close to 35 years of earnings and you are close to retirement, you'll benefit greatly by continuing to work until you have 35 full years of earnings to include in your benefit calculation. Most of the people it'll affect are females who took time off work to raise a family.
The top 35 years of earnings are then divided by 35 to arrive at your average indexed monthly earnings (AIME). A formula is applied to your AIME to figure out your primary insurance amount (PIA). We won't go into the specifics of the formula; the vital thing to notice is that your Primary insurance amount is the completely unreduced benefit you would receive if you retired at your full retirement age (age 66 for people born between 1943 and 1954). This amount will be decreased if you take early retirement or increased if you retire after age 66.
The PIA is also the basis for many other benefits like spousal benefits, thus it is important to understand that your PIA is not always the same amount that you will receive. If you are married and your spouse will be collecting benefits according to your earnings rather than her own, then you might need to maximize your own PIA to maximize the total Social Security benefits you and your spouse will get.
Social Security Survivor Benefits- The Thing Women Should Learn About
When Social Security was established most women did not work. Lower or no earnings combined with a longer life span meant poverty for many women when their husbands passed away. Social Security recognized these challenges and have implemented several changes to the system to help women avoid poverty.
Social Security Benefits: A Helpful Discussion On Terms & Conditions To Obtain The Benefit And Ways To Get After A Family Member's Death
The loss of a family member can be devastating, both emotionally and financially. Social Security is meant to be a survivor program as well as a retirement program. Most people are aware of Social Security retirement benefits, but are you aware that there are Social Security death benefits as well?
Some Valuable Information That Will Aid You To Know When And How To Submit Your Social Security Application
As you get closer to retirement one of your top questions is probably when and how to submit your Social Security application. Should you apply at age 62 or 66? What are the steps to applying for Social Security once you've decided to start collecting retirement benefits?
Making Use Of Government Loans To Make Improvements To Your Home.
Being on the property ladder whether renting or owning your own home it can be a very expensive ordeal.
Social Security Benefits: Several Vital Specifics On Cost Of Living Adjustment 2011
For the second year in a row people who rely on Social Security will not be receiving a cost of living increase. This is only the second time since the cost of living adjustment (COLA) was adopted that recipients have not received an increase.
Completely New Guidelines Mean More Men And Women Doing Roth IRA Conversions In 2010
As we near the end of 2010, countless people have already done Roth IRA conversions, and many others are questioning if a Roth IRA conversion in 2010 is the right move for them.
Some Necessary Tips- To Learn About Getting A 401K Plan.
Retirement income is often referred to as the three-legged stool because traditionally retirement income has come from three sources: pensions, Social Security and your own savings. Well, the three-legged stool is looking pretty lopsided for many people these days as pensions become extinct and Social Security changes take place.
Questions To Ask When Choosing A Financial Planner
Many people hire financial planners to help them meet their financial goals. Whether you are a beginner investor with very little experience or whether you have a good knowledge and understanding of financial planning topics, a financial planner can be a valuable asset when planning for your financial goals.
Other Readings
- Social Security Benefits: A Helpful Discussion On Terms & Conditions To Obtain The Benefit And Ways To Get After A Family Member's Death
- How You Will Proceed With Social Security Survivor Benefits After Your Spouse Passes Away
- Some Valuable Information That Will Aid You To Know When And How To Submit Your Social Security Application
- Making Use Of Government Loans To Make Improvements To Your Home.
- What You Need To Know About Financial Planners
- Social Security Eligibility Rules: How Can A Full-Time Housewife Enjoy The Benefit Of Social Security?
- Social Security Eligibility Criteria: How Can A Full-Time Homemaker Collect Social Security?
- Some Valuable Information Which Will Aid You To Understand When And The Procedure To Submit Your Social Security Application
- Some Helpful Information Which Will Aid You To Know When And The Procedure To Submit Your Social Security Application
- Some Valuable Information That Will Assist You To Understand When And How To Submit Your Social Security Application
- Submitting Your Social Security Application: When And How
- Some Useful Information Which Will Help You To Comprehend When And The Procedure To Submit Your Social Security Application
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