How Are Social Security Benefits Calculated? Few Points & Factors Affecting The Benefits Among 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 an important question because it could affect how long you require to work, whether you should continue to work during your retirement years, or any other factors of your retirement plan. Firstly, please note that you receive a Social Security retirement benefit estimate every year in the mail, usually around your birth date. There are also many calculators available on the Social Security website to assist you estimate how much your retirement benefits will be, thus you do not need to know the methods to calculate the benefit yourself. It's still helpful to know how Social Security is calculated, however, so here are the fundamentals: Basically, your highest 35 years of earnings are listed for inflation, then averaged to figure out the basis for your per month 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've close to 35 years of earnings and you're near to retirement, you'll benefit greatly by continuing to work until you've 35 full years of earnings to include in your benefit calculation. The majority of people this will affect are ladies 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 Average indexed monthly earnings to figure out your primary insurance amount (PIA). We won't go into the details of the formula; the important thing to note is that your PIA is the completely unreduced benefit you would receive if you retired at your full retirement age (at the age of 66 for people born between 1943-1954). This amount will be decreased if you take early retirement or increased if you retire after age 66. The PIA is also the base for other benefits such as spousal benefits, so it is significant to understand that your Primary insurance amount isn't always the same amount that you will receive. If you're married and your spouse will be collecting benefits based on your earnings instead of her own, then you may need to maximize your own PIA to maximize the total Social Security benefits you & your spouse will obtain. Social Security Income: Tips To Help You Get The Most Out Of Your Social Security Income 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 Homemaker Get 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. 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. Some Significant Facts Which You Require 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 Why Women Need To Learn Regarding Social Security Spouse And Survivor Benefits When Social Security was established most women did not work. Lower or no earnings combined with a longer life span meant poverty for many women when their husbands passed away. Social Security recognized these challenges and have implemented several changes to the system to help women avoid poverty. 3 Ways A Financial Planner Can Easily Help You Attain Your Very Own Financial Objectives Many people wonder exactly what a financial planner does, and how they can help you. Here are just three ways a financial planner can help you achieve your financial dreams and goals. Pay Day Loans:Understand More About It. Have you ever found yourself in an emergency situation? Do you require a substantial amount of money fast but don't know where to get it? Payday loans may be just the thing you need. 3 Reasons To Use A Fee Only Financial Experts There are three different types of financial advisors: the commission broker who sells a product for a commission, the fee-based advisor who provides investment management for a percentage of the assets invested, and the fee only financial planner who provides a comprehensive financial plan for an hourly fee. The Story Of Americans Buying Gold Coins Buy gold coins is becoming popular as an investment for two key reasons. First, they can be easily purchased and easily sold because they are guaranteed by the United States government. Buying gold coins in trust Gold Eagles |
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