Social Security Benefit Calculator
To-do List Prior to Retirement
- Save and verify each annual Social Security Statement you receive prior to you birthday. If you are not currently receiving annual statements you can sign up here.
- You need to sign up for Medicare prior to your 65th birthday, even if you are not retired. This is to help ensure that your Medicare benefits start automatically.
Eligibility for Social Security Retirement Benefits
- You need at least 40 credits earned in you lifetime
- You get up to 4 credits per year (based on earnings, as of 2007 one credit was earned for every $1,000 of earnings)
- Credits are for eligibility only! They are not used for calculating benefit amounts
- Benefit amounts are based on average earnings over a 35-year period
- SSA places a cap on the total wages used to calculate benefits (2007 cap is $97,500) and the benefits themselves (2007 cap is $1,998)
- 62 is the minimum age to receive benefits
- 65, 66, 67 (depending on birth year) is the age requirement to receive full benefit amounts. Note: You can view a full retirement age chart here
- 70 is the maximum age that can be used to calculate benefit amounts
Determining when to Start Collecting Social Security Retirement Benefits
First, financial planners estimate that Social Security benefits cover, on average, about 40% of what you need in order to maintain your current lifestyle. Because of this, many individuals of retirement age continue to work after reaching retirement age. This is also an important factor in deciding whether to take early retirement.
Things to consider in deciding when to start drawing:
- Generally, The Social Security Administration tries to calculate benefit payments based on average life expectancy (basically, if someone lived exactly as long as expected, there would be little difference whether the person started drawing at age 62 or the maximum retirement age)
- However, if one lives much longer than average, waiting to draw benefits will result in significantly more benefits
- If one has health issues, he/she may be better off drawing sooner
- Whether or not you will work after retirement age
- If you work and receive benefits (and are under the full retirement age for the whole year), the government will reduce benefits by $1 for every $2 you earn above the limit ($12,960 in 2007)
- If you work and receive full benefits (and are at or above full retirement age), the government will reduce benefits by $1 for every $3 you earn above the limit (34,440 in 2007)
- Note: If you work full-time, you should probably wait until maximim retirement age. However, if you work part-time and are under the limit, and after weighing the other considerations (i.e. health), it may be better to draw early. Also, if you work between, min and max retirement age, it will still help to increase your total benefit amounts.
- How much money will you need?
- A situation may dictate the absolute need to accept benefits right away