How Can I Estimate My Social Security Benefits in Retirement?
Your Social Security benefits don’t have to come as a surprise when you apply for them. You can get an estimate now so you can more easily plan for retirement. We recommend using the Social Security Administration (SSA) website to create an estimate. You can use a variety of calculators that allow you to enter information such as your annual income and expected retirement age.
For a personalized number, you can create a My Social Security account, giving you a more tailored estimate based on your work history. Just remember that the benefit amount can change. As this AARP article reports, fluctuations in your earnings, SSA cost-of-living adjustments, whether you work after starting benefits, and changes to Social Security law will affect the benefit you receive.
Your Retirement Age Can Significantly Affect Your Social Security Benefit
You can start collecting Social Security benefits at age 62 or wait until your “full retirement age” (FRA), which is based on the year you were born. You can also postpone up to age 70.
Why wait if you can collect benefits at 62? Because your decision affects how much you will receive for the rest of your life.
Full retirement age is when you receive 100% of your benefit amount. If you claim benefits before that day, your monthly amount will be reduced permanently. Claim benefits after that day, and you will see an increase for each month you wait up to age 70.
The Social Security benefits webpage shows the difference you could expect by claiming early and at FRA. For example, if you were born in 1960, your full retirement age would be age 67. If your benefit at age 67 would be $1,000, you would receive only $700 at age 62. By waiting until age 70, you would increase your benefit by 8% for each year you wait, or 24%, for a total of $1,240 monthly.
What About Spousal Benefits?
Social Security can also provide benefits based on a spouse’s earnings record. The amount can be as much as 50% of the spouse’s benefit. For example, say your spouse was the primary wage earner. Your Social Security benefits would then be based on your own work record or your spouse’s, whichever was the higher amount.
Social Security benefits can also be paid based on a divorced spouse’s work record, and survivor benefits can be paid to widows, widowers, and dependents. The Social Security Administration provides more information on its website for divorced spouse benefits and survivors benefits.
How to Create a My Social Security Account
You can create your free My Social Security account at https://www.ssa.gov/myaccount/. You will need to:
Verify your identity by providing personal information and answering questions drawn from your credit report.
Create a username and password to access your account.
Confirm your email address and phone number.
If you have a security freeze or fraud alert on your credit reports, you will need to temporarily lift it to create a My Social Security account. If you don’t want to lift it, you can visit a local Social Security office to open the account in person.
Final Thoughts
Spend some time with your benefit estimates to start solidifying your retirement plan. You can also consider speaking with a fiduciary financial advisor to incorporate Social Security into a detailed financial plan. Our wealth management firm in Roseville and Folsom, CA, and Lehi and Logan, UT, could help you decide when to claim Social Security benefits based on your goals and situation.
Schedule a complimentary, 15-minute call with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was prepared by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor serving the greater Sacramento area with an office in Roseville, CA. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.