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How is Social Security Calculated?
Date Updated: July 26, 2024
Written by:
With over a decade of dedicated experience, Andrea Miller boasts an extensive background in healthcare writing and editing. Her expertise spans various facets of the healthcare industry, with a particular focus on nursing, senior care, Alzheimer’s disease, and public health. Andrea has also contributed her editorial talents to reputable publishers in the Philadelphia region, complementing her extensive freelance work.
What other factors could affect the amount you receive?
Retirement age and inflation impact the amount of Social Security you receive. The Social Security benefit calculation assumes you will stop working at the full retirement age of 65. If you decide to start receiving payments earlier, the agency reduces your benefit amount by a certain percentage, depending on your age at retirement. If you delay your retirement, the agency increases your benefit amount by a specified percentage each year until you turn 70.
Your Social Security benefits also change over time. Once you start taking retirement payments, you will receive a cost of living increase each year. The Social Security Administration determines the annual amount based on the Consumer Price Index, a measure of inflation calculated by the Bureau of Labor Statistics.
Can I calculate my own Social Security payments?
You can estimate the amount of your Social Security benefits with the online calculator from the Social Security Administration. To use this tool, enter your birth date, the amount you made in the current year and the date you plan to retire. However, the calculation you receive will not be exact because the tool doesn’t use your actual earnings history. In addition, it only works for people who are at least 22 years old. Younger people haven’t yet earned enough to accurately estimate their benefits in retirement.