How Much You Will Get From Social Security

This text tells the reader how to estimate their monthly Social Security income in retirement.

You may not be able to accurately predict the amount of Social Security you will receive, particularly if retirement is still several years away. Knowing how to calculate your Social Security benefit can help you plan for retirement, and may even increase your future Social Security payments.

How to calculate how much Social Security you'll receive in retirement

Create a My Social Security Account.

Take a Look at the Average Social Security Payment

The average Social Security benefit has increased by 8.7% to $1,827 per week in 2023. This is up from $1681 per month in 2012, thanks to the Social Security cost of living adjustment. In 2023, the maximum Social Security benefit is $3.627 for someone retiring at full retirement age. To receive this Social Security payment, an employee would have to earn the maximum amount of tax, which is currently $160.200 in 2023. This worker must also work for 35 years to reach that maximum.

How to calculate your Social Security payment

Social Security payments are calculated based on the 35 most lucrative years of your career, and adjusted for inflation. Your lowest-earning year is removed from the calculation if you have worked for more than 35 consecutive years. This results in a larger payment. Social Security payments are reduced for those who have not worked 35 years.

The Social Security Administration uses your 35 highest years of earnings to calculate benefits. Earnings before 60 are also indexed for inflation. This means that, while you may have earned more over the course of your career, your income this year might not be your highest earning year after indexing.

The benefit amount for a worker eligible to receive Social Security in 2023 is calculated by multiplying $1,115, which is the first $1,115, by 90%. Earnings up to $6 721 are multiplied by 32%. Earnings above $6 721 are multiplied by 15%. This sum, rounded to the nearest 10c, is your initial payment. Your payments can be increased by cost-of-living adjustment and delayed retirement credit.

Calculate your Social Security Retirement Age

The amount of your Social Security payment is heavily influenced by the age you were when you started. If you start receiving payments before the full retirement age (typically 66 or 67 depending on your year of birth), your monthly Social Security benefits will be reduced. Your monthly payment can be increased for every month that you wait between full retirement age (age 70) and your claim date.

Married couples can claim more benefits. If the spouse with the highest income is married, the couple can receive Social Security benefits equal to half of that spouse's earnings if it's higher than their own. If you claim spousal benefits before reaching full retirement age, they will be reduced. If the marriage lasted at least 10 years, you can also claim payments on the basis of an ex-spouse’s work history. If the spouse with the highest income dies first, a spouse may be entitled to survivor payments. Couples should coordinate their claims to get the most benefit for both of them and possibly qualify for higher payments if a spouse survives.

Subtract Medicare Premiums

Medicare Part B premiums are often deducted from Social Security payments for many retirees. In 2023, the standard Medicare Part B monthly premium will be $164.90. Medicare Part B payments cannot decrease Social Security payments to existing beneficiaries. Therefore, a Medicare Part B increase can't exceed your annual Social Security cost of living adjustment.

Tricia Neuman is the executive director of the Program on Medicare Policy, at the Kaiser Family Foundation. She says that some people may see their Social Security checks go down, not because they paid their Part B premium but due to the Part D drug price. The Part D program does not have a hold harmless clause. Medicare Part D premiums are based on which plan you choose, and you can change plans every year during open enrollment.

Remember Income Tax Withholding

Most retirees are required to pay income taxes on their Social Security benefits, particularly if they also have other retirement income sources. Dana Anspach is a certified financial advisor and CEO of Sensible Money, Scottsdale, Arizona. She says that if Social Security is the only income you receive, there are no taxes to pay. If you have any other income sources, like a pension or IRA withdrawal, part-time employment, interest, dividends and so on, that income is added to the IRS formula and results in a tax of between zero and 85%. You can choose to have 7% of your Social Security benefits withheld as income tax.


Create My Social Security Account

Create a My Social Security Account to get an estimate of your future Social Security Benefits. These estimates are based upon your actual earnings history and tends to be more accurate for those who are approaching retirement age. You may find that your estimates change year-to-year, particularly if there are significant changes in your salary or gaps in earnings history.

Angie Furubotten LaRosee is a certified financial advisor at Avea Financial Planning, Richland, Washington. She says that creating a my Social Security Account allows you to view your most recent Social Security Statement, which includes your reported annual earnings, full retirement age and estimated retirement, disability, and family benefits, and more. You will want to review your earnings history at least every two years to ensure there are no mistakes and to monitor your estimated retirement benefits.

A Social Security calculator can help you calculate the best age for signing up to receive payments, based on personal circumstances.