Social Security Benefits

Are you wondering how much you will receive from Social Security when you retire?

It depends on how much you’ve earned and how long you have worked under the Social Security system. Your retirement benefit will be based on your average lifetime earnings. Don't worry if you started out as a busboy and worked your way up to executive chef—only your highest 35 years of earnings will count.

The amount you receive will also be affected by whether you start collecting benefits early (you'll get less), whether you collect benefits late (you'll get more), whether you work after you retire, whether other family members receive benefits based on your earnings record, whether you collect certain other government benefits, and whether the cost of living rises.

You may also use the resources available through the Social Security website at www.ssa.gov to estimate your retirement benefit online based on your actual earnings record.

You can also sign up for a my Social Security account so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor's, and disability benefits. It also includes other information about Social Security that will be very useful when planning for retirement.

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When Should I Start My Social Security Retirement Checks?

The decision about when to claim your benefits is a significant one. Americans are living and working longer, and retiring later. Unfortunately, some of us haven’t saved much. According to the National Institute on Retirement Security, “the average working household has virtually no retirement savings.” You might need Social Security to stay afloat in old age.

More is Better

The size of the Social Security check you’ll receive is the result of your earnings record and age when you start taking benefits. Your “full retirement age,” when you’ve earned 100% of those benefits, is 66 or 67, depending on when you were born. Collect early, before full retirement age, and you’ll pay a penalty—you’ll receive a smaller check.

Wait if You Can

The choice of your start date locks in the size of your checks. Some Americans grab Social Security as soon as they can. For widows and widowers, that’s age 60. For everyone else, it’s 62, which has been and still is the most popular age to start benefits, according to U.S. News & World Report.

That’s changing. According to the Social Security Administration, men and women who can claim retirement benefits at the earliest eligibility have declined drastically.

If you hold off filing until after full retirement, your checks earn a bonus of 8% per year. The longer you wait, the bigger your benefit becomes, until age 70. After 70, there’s no benefit to waiting longer.

Waiting makes sense if you’re healthy and members of your family tend to live longer. A $2,000 benefit, for example, becomes $2,640 if your full retirement age is 66 and you wait four more years.

A quarter of today’s 65-year-olds will live past 90, according to the Social Security Administration. You may need those checks for a long time.

Trade-Offs

Here’s a hypothetical example of the pros and cons for someone eligible for $750 per month at 62 who waits and claims benefits at 70:

Pros:	Cons:
At 70, your monthly checks are $1,320 to $1,560 more per more a month for life.	You wait longer to get checks.
After breaking even between age 80 and 81, your total earnings are greater each year compared with taking benefits at 62.	You get fewer checks overall.
At 83, your total Social Security earnings are $16,920 more than if you’d begun at 62; at 85, you’ll have $30,600 more; and by 90, you’ll have $64,800 more.	You lose money if you die before breaking even in roughly 10½ years, or at age 80½.