Social Security Benefits: How Much Income Will You Get in Retirement?

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Social Security is a major source of income for millions of retired workers, but many Americans are misinformed about the program. For example, of adults currently not receiving benefits, 44% have no idea how much monthly income Social Security will bring in, according to Nationwide. This can lead to problems when planning your retirement.

According to the Social Security Administration (SSA), Social Security benefits replace an average of 40% of early retirement. Last year, the average monthly benefit to newly retired employees was $1,754. But the age at which you claim Social Security plays a major role in determining the amount of income benefits.

Here’s what you need to know.

Image source: Getty Images.

How Social Security Benefits Are Calculated

The amount of your pension benefit is based on your lifelong income and your age at which you are entitled to social security. Retired employees who claim Social Security before full retirement age (FRA) are permanently penalized with a reduced benefit, while retired employees who claim Social Security after FRA are permanently rewarded with an increased benefit.

Retired workers claiming Social Security benefits at age 62

Men’s life expectancy at age 62 is about 20 years, and women’s life expectancy is about 23 years, according to the SSA.

Men: In 2021, the average benefit paid to retired men claiming Social Security at age 62 was $1,366 per month, or $16,392 per year. Assuming a life expectancy of 20 years, Social Security income would total $327,840.

Women: In 2021, the average benefit to retired women who claimed Social Security at age 62 would have been $1,089 per month or $13,068 per year. Assuming a life expectancy of 23 years, Social Security income would be $300,564.

Retired Employees Claiming Social Security Benefits at Full Retirement Age (FRA)

The full retirement age ranges from 66 to 67, depending on your year of birth. Men’s life expectancy at FRA is about 17 years, and women’s life expectancy is about 20 years, according to the SSA.

Men: In 2021, the average benefit to retired men claiming Social Security at FRA was $2,300 per month, or $27,600 per year. Assuming a life expectancy of 17 years, Social Security income would be $469,200.

Women: Last year, the average benefit paid to retired women claiming Social Security at FRA was $1,823 per month, or $21,876 per year. Assuming a life expectancy of 20 years, Social Security income would be $437,520.

Retired workers claiming Social Security benefits at age 70

Men’s life expectancy at age 70 is about 15 years, and women’s life expectancy is about 17 years, according to the SSA.

Men: By 2021, the average benefit to retired men who claimed Social Security by age 70 would have been $3,156 per month, or $37,872 per year. Assuming a life expectancy of 15 years, Social Security income would total $568,080.

Women: By 2021, the average benefit for retired women who claimed Social Security by age 70 would have been $2,470 per month, or $29,640 per year. Assuming a life expectancy of 17 years, Social Security income would be $503,880.

How Much Social Security Income Can You Expect When You Retire?

As discussed, life expectancy changes as you get older. For example, men’s life expectancy at birth is 76 years, but men who actually live to age 76 have a life expectancy of almost 11 years. This means that the decision about when to apply for benefits must be based in part on your life expectancy.

With that in mind, this chart is based on life expectancy at age 62 — the age at which you qualify for Social Security retirement benefits. In other words, the chart assumes that men in all three age groups will live to age 82, and it assumes that women in all three age groups will live to age 85.

In addition, the chart is based on the average retirement benefit paid to new beneficiaries who started Social Security in 2021 at the age of 62. Anyone who turned 62 last year (and claimed Social Security) would have seen their benefit cut by 29.17%. I reversed that cut to estimate Social Security income for individuals who file a claim with FRA.

Likewise, anyone who turned 62 in 2021 would have received a deferred pension of 25.3% if they had applied for retirement benefits at age 70. I accounted for that credit to estimate Social Security income for individuals claiming age 70.

Retired Employees

62 years old

Full retirement age

70 years old

Men

$327,840

$351,010

$348,060

Women

$300,564

$335,181

$346,845

Data source: Chart by author.

Individuals at age 62 can use the chart above to estimate how much total income they can receive from retirement benefits based on when they claim Social Security. However, the exact amount you receive will depend on your lifetime earnings. For a more accurate estimate of your future benefits, you can use the my social security account portal.

As a warning, it’s impossible to predict what cost of living adjustments (COLAs) will be applied to benefits in the coming years. But COLAs are designed to offset the impact of inflation, meaning they theoretically leave the purchasing power of benefits unchanged. In other words, the income figures in the chart express purchasing power in 2021 dollars.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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