How To Calculate Future Approximate Social Security Retirement Benefits
Wondering how To Calculate Future Approximate Social Security Retirement Benefits? The best way to calculate future estimated Social Security retirement benefits is to ensure your annual Social Security statement is correct. The Social Security Administration mails every worker and former worker over the age of 25 an annual statement. If you are already collecting Social Security or on Medicare you will not receive an automatic annual statement; additionally, if you have requested a statement in the previous eleven months or the Social Security Administration does not have your correct mailing address you will not receive a statement.
The Social Security Administration mails statements three months prior to you birth month, if you do not receive your statement by you birthday contact the Social Security Administration. You can also request a Social Security statement at any time in the year by contacting the Social Security Administration by Internet, mail or phone. The Social Security statement shows all of your lifetime earnings used in the calculation and provides estimates on your retirement benefits at your full retirement age and reduced benefits at age 62. Your statement also provides estimates on Disability and Survivors benefits. The Social Security Administration statement should be reviewed carefully to ensure your information and earnings history are correct, mistakes should be reported to the Social Security Office immediately.
To be eligible for Social Security Retirement benefits you need to have accumulated 40 credits which is roughly the equivalent to ten years of continuous employment where Social Security taxes were paid. You can earn up to four credits per year, credits are based on earnings upon which Social Security taxes were paid. Credits are based on dollars earned and the amount tends to rise slightly every year. In 2010, earnings of $1,120 are required for one credit; earnings of $4,480 would be needed for the annual maximum of four credits. Keep in mind that this is not the cap of Social Security taxes paid but is the minimum earnings required to obtain credits for benefit entitlements.
Several key factors involved in estimating Social Security retirement benefits are your overall lifetime earnings that you have paid Social Security taxes on, the year in which you were born and the age at which you retire. If you retire early at age 62 benefits are reduced by 25%; if you were born after 1959 and expect to retire at 62 years of age your benefit will be reduced by 30%. If you were born between 1943-1954 full retirement age is 66; if you were born in 1960 or thereafter full retirement age is 67. The third key element is the amount of Social Security taxes you have paid into the system over your working career.
The Social Security Administration Website has detailed information on retirement benefits; the site includes retirement calculators where you can model different scenarios based on your personal information. To use the Social Security Administration retirement calculator you need to input your Social Security number to access your account; once in the calculator you can run retirement estimates at different ages. The Social Security Administration Website also includes a form you can download to do a manual estimate; if you do not have access to a computer you can obtain a copy from your Social Security Office.
Social Security benefits are an important part of your financial and retirement planning. Your best tool in maintaining estimates of future Social Security retirement benefits is to ensure your annual statement is correct and promptly report any errors.