How Are Social Security Benefits Calculated? Few Things & Factors Having Effect On The Benefits One of the most popular Social Security questions that I hear from baby boomers getting ready to retire is "how are Social Security benefits calculated?" This is a vital question since it could affect how long you need to work, whether you should continue to work during your retirement years, or any other aspects of your retirement plan. Firstly, please note that you receive a Social Security retirement benefit estimate each year in the mail, usually around your birth date. There are also several calculators available on the Social Security website to assist you estimate how much your retirement benefits will be, so you do not need to know how to calculate the benefit yourself. It's still useful to know how Social Security is calculated, however, so here are the basics: Basically, your highest 35 years of earnings are indexed for inflation, then averaged to figure out the basis for your monthly benefit. If you worked less than 35 years, the missing years will be calculated as zero for purposes of determining your benefit amount. Planning tip: If you have close to 35 years of earnings and you're close to retirement, you'll benefit greatly by continuing to work until you have 35 full years of earnings to include in your benefit calculation. The majority of people this will affect are women who took time off work to raise a family. The top 35 years of earnings are then divided by 35 to get your average indexed monthly earnings (AIME). A formula is applied to your AIME to figure out your primary insurance amount (PIA). We won't go into the specifics of the formula; the significant thing to note is that your PIA is the full unreduced benefit you would receive if you retired at your full retirement age (at the age of 66 for people born between 1943 and 1954). This amount will be decreased if you take early retirement or increased if you retire after age 66. The PIA is also the basis for other benefits such as spousal benefits, thus it's significant to understand that your Primary insurance amount is not always the same amount that you will receive. If you are married and your spouse will be collecting benefits based on your earnings instead of her own, then you may want to maximize your own PIA to maximize the total Social Security benefits you & your spouse will receive. A Few Key Points Which You Need To Know About Social Security Spouse Benefits When most people think about Social Security, they naturally think of retirement benefits. However about 1/5 of all Social Security benefits are spousal or survivor benefits, so when you're planning for retirement, it's important to consider the fact that you or your spouse may collect Social Security survivor benefits Social Security Benefits: Guidelines To Help You Make The Most Of Your Social Security Retirement Benefits As you get closer to retirement, choosing when to take your Social Security may seem like rolling the dice. There are so many decisions to make, such as: Social Security Eligibility Rules: Can A Full-Time Housewife Collect Social Security? When Social Security was first established, most families only had one bread-earner, and only the working spouse qualified for retirement benefits. This caused financial difficulties for the spouse who didn't work (and therefore didn't qualify for Social Security) if the working spouse passed away first. Completely New Policies Mean More People Doing Roth IRA Conversions In 2010 As we near the end of 2010, countless people have already done Roth IRA conversions, and many others are questioning if a Roth IRA conversion in 2010 is the right move for them. Social Security Benefits: A Few Crucial Specifics On Cost Of Living Adjustment For the second year in a row people who rely on Social Security will not be receiving a cost of living increase. This is only the second time since the cost of living adjustment (COLA) was adopted that recipients have not received an increase. Using Government Loans So That You Can Upgrade And Improve Your House. Being on the property ladder whether renting or owning your own home it can be a very expensive ordeal. How You Will Go With Social Security Survivor Benefits After Your Spouse Passes Away When Social Security was first established, it only paid retirement income to workers who qualified. It was later amended to include benefits for spouses and survivors, which made it more of a family or insurance plan, instead of just a retirement plan. About Social Security Impairment: What You Must Know Prior To Filing For Handicap Benefits Most people think of retirement when they hear Social Security, however Social Security provides benefits to people who are disabled as well. The list of requirements that must be met for Social Security disability benefits is pretty long, and many people don't meet those requirements. Questions To Ask When Looking For A Financial Planner Many people hire financial planners to help them meet their financial goals. Whether you are a beginner investor with very little experience or whether you have a good knowledge and understanding of financial planning topics, a financial planner can be a valuable asset when planning for your financial goals. |
Associated Articles
Partner Sites
Privacy Policy Disclaimer Contact Site Map
Copyright 2009.
All Rights Reserved.
www.lcdtvwallmountbracket.net
