There was a time in America when a worker could depend on Social Security retirement benefits to cover the basic costs of living during his/her retirement years. Those days are long gone. In fact, experts are worried that workers in their 20s and 30s may not even get any Social Security retirement benefits if something isn’t done to correct the system before they reach retirement age. If you are nearing retirement age now, however, you likely want to know how much you can expect in Social Security retirement benefits when you reach your “Golden Years.”
A better understanding of how the Social Security retirement system works helps to explain how your benefits are determined. When you receive a paycheck you have likely noticed that annoying deduction for “FICA” taxes. Those deductions are how all workers pay into Social Security and Medicare during their working years. Those deductions though, are actually used to fund Social Security retirement benefits for current retirees. The idea is that when you reach retirement age the current group of workers will be paying into the system as well which will then fund your Social Security and Medicare benefits.
The amount you will receive in benefits is based, in part, on how much you have worked during your lifetime because your benefits are all based on “work credits” earned over your lifetime. As of 2015, you earn one work credit for every $1220 in income you earn and you may earn a maximum of four work credits a year. You need 40 work credits before you are eligible for Social Security retirement benefits.
The amount you will receive in retirement benefits is based on your 35 highest earning years with a maximum monthly benefit cap of $2663 for an individual as of 2015. Assuming you take your retirement benefits at the standard age (currently around 66 or 67, depending on your year of birth) the average monthly benefit in 2015 is around $1330 for an individual and $2175 for a couple, assuming both parties are eligible for benefits. You can begin receiving benefits as early as age 62 or as late as age 70. If you elect to start benefits early you will receive a reduced monthly benefit amount whereas you will receive an increased monthly benefit of around eight percent for every year you delay your retirement up to age 70. To get a more accurate idea how much your Social Security retirement benefits will be you can use the
“Social Security Retirement Estimator” tool found on the SSA website.
If you have additional questions or concerns about retirement planning, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.