Posted by Michelson Law Office

Simple Tips to Estimate Your Social Security Benefits

Simple Tips to Estimate Your Social Security Benefits

Knowing how to estimate your social security benefit is an excellent way to plan for retirement. There is also a huge chance of boosting your payments. Here are the tips

  • Know the Average payment

As of January 2019, the average social security benefit was $1,461 per month. Someone that retires at the full retirement age will enjoy $2,861 in 2019. To qualify for this, however, an employee must earn $132,900 in 2019, which is the maximum taxable amount.

  • Know how to Calculate it

The 35 earning years of one's career are used in calculating social security payments, with provisions for inflation. You would have a higher payment if you worked for more than 35 years since your lowest earning will be excluded. People that didn't work up to 35 years will have a lower amount as zero will be used in the calculations.  

In calculating your social security benefits, the SSA will consider the highest-earning in the 35 years of earning before the 60th birthday and make provision for inflation. This means that even if you got the highest wages in 2019 that might not be your highest earning after they factor in inflation. 

  • Factor in Your Retirement Age

The age that you commence social security is significant. If you claim the benefits before the full retirement age, you will have reduced benefits. There is no chance to boost your monthly payment for each month you delay your claim.

There are more claiming options for married couples. For couples, they can receive social security benefits that amount to 50% of the income of the spouse with higher income. As expected, the payment will reduce should you claim them before the retirement age. There is an option to claim your benefits using a former spouse’s work history as well.

  • Subtract Medicare Premiums 

A lot of retirees schedule their Medicare Part B to be deducted from the social security checks. In 2019, the standard per month is $135.50 for Medicare part B. By law, Medicare Part B payment cannot reduce your social security benefits for existing beneficiaries. As a result, a Medicare Part B premium will not exceed your social security value. 

If your social security values go down, it is not due to Medicare part B. instead, and it might be due to Part D. the value of medicare part D varies depending on the plan you are on. You can also change your policy every year during the enrollment period.  

  • Factor in Income Tax Withholding 

A lot of retirees' social security payments are subjected to income tax. This holds, especially if there is an alternative source of income during retirement. If your only source of income after retirement is social security, you may pay no pay tax on it.

With other sources of income like IRA withdrawals, part-time work, dividends, or pension, the income will be subjected to the IRS formula. You will have a figure between 0 and 85 percent of your social security benefit subject to taxation.

  • Create a My Social Security Account 

There is an easy way to have an estimate of your social security benefit at various ages. This is as simple as creating your own my social security account. With this, you will be able to get a customized estimate of your social security benefit at any age. Many things affect the accuracy of the estimates obtained. It ranges from your precise earning history to how close you are to the retirement age.  

If you have a significant salary change, expect your estimate to change from year to year. When you create a my social security account, you can access a lot of information like

  • Your recent Social Security statement
  • Your annual reported earnings 
  • Your full retirement age
  • Disability and family benefits
  • Estimated retirement 

It is vital to keep a tab on your earning history as well as the estimated retirement benefits to make sure everything is in order without error.

It is essential to have an idea of your social security estimate as it can guide you to determine the optimal age to sign up. This will position you for the maximum benefits available.

Michelson Law Office