What Are My Social Security Benefits Going to Be?

••• mailbox image by palms from Fotolia.com

You may have an idea of how much you’ll have in savings and investments when you retire, but Social Security is another important factor to consider. Some may think they get everything back that they paid in through their working years, but this simply isn’t true. Social Security works in a similar way to any insurance program — everybody pays a little each year, so that those who truly have no resources can survive. You may be surprised at how little, or how much, you may receive as a future Social Security beneficiary.

Social Security Statement

If you’re older than 25 years old and you’ve been paying Social Security taxes, you should receive annual Social Security Statements in the mail. Your Social Security Statement shows an estimate of how much you and your family will receive when you retire. However, if you have changed jobs or quit working recently, your Social Security Statement may not provide an accurate estimate of your future benefit.

How SSA Calculates Benefits

The Social Security Administration bases your retirement benefit on two main things: how much you made during working years and the age at which you decide to start receiving benefits. The higher your average salary was, the higher your monthly benefit will be. Though many people start receiving benefits at their full retirement age, you can opt to receive benefits as early as age 62. However, if you do receive early benefits, your monthly amount will be lower since your benefit has to be stretched over a longer period of time. The maximum benefit you can receive depends on when you choose to retire. If you're retiring at your full retirement age of 66, in 2010 the maximum benefit you may receive is $2,346. However, this amount will fluctuate over time due to inflation.

Full Retirement Age

Since your benefit will be lower if you retire early and higher if you delay retirement, it's helpful to know what the SSA considers to be your full retirement age. If you were born in 1942 or earlier, your full retirement age is 65; if you were born between 1943 and 1959, it is age 66 and if you were born in 1960 or later it is 67.

Benefit Calculators

To get a personalized idea of what your benefit may be, use the SSA’s secure benefit calculator tools (See Resources). You can only estimate a retirement benefit for yourself; you cannot do it on behalf of a family member. You’ll need to enter basic personal information and income information. The estimator will generate a result for you, but note that this isn’t a definite calculation — your benefit amount is subject to change due to inflation or changes in your work situation.

Retirement Benefits Statistics

In November 2010, retirement beneficiaries received an average monthly benefit of $1,174. Note that spouses and dependent children can also receive their own benefits on your record — spouses of retired workers received an average benefit of $579, while dependent or disabled children received an average benefit of $576.