The Easiest Way to Determine Your Social Security Benefit
Understanding how much money you can expect from Social Security is crucial for retirement planning. Once you know how large your Social Security checks will be, you can subtract this from your total estimated retirement expenses to figure out how much you need to save on your own. But calculating your Social Security benefit yourself isn't easy.
Fortunately, you don't have to. Sign up for a My Social Security account with the Social Security Administration (SSA), and it will tell you how much to expect. Here are the details along with what to do if your projected benefit isn't as high as you'd hoped.
The My Social Security account
To open an account, you must enter some basic personal information, and you'll need your Social Security number. Then, you receive a text message with a verification code for added security. Finally, you must answer some personal questions that only you would know the answer to: streets you used to live on, which company your mortgage is through, and so on.
There are a lot of hoops to jump through, but it's all to make sure that the only person accessing this information is you. If you want your account to be extra secure, you can also request an optional upgrade code, which the SSA will send you by mail.
When you log into your account, you'll see your estimated benefit at your full retirement age -- 66 or 67, depending on your birth year -- based on your current work record. More detailed information is available through the "Estimated Benefits" tab. Here, you can see how much your benefits would be if you began taking Social Security at 62 or if you delay until age 70. You'll also be able to see what you would get in disability benefits or what your family would get in survivors benefits if you became disabled or died this year.
If you don't see any information here, it may be because you have not yet worked long enough to qualify for benefits. You must earn 40 credits to be eligible for Social Security and Medicare, with a credit defined as $1,360 in wages or self-employment income in 2019. You may earn up to four credits per year.
You can also request replacement Social Security cards and track your earnings history through a My Social Security account. It's a good idea to go through your earnings record to see if it's accurate. Compare it against your own records and tax returns from previous years and notify the SSA if you see anything amiss, which could reduce the size of your Social Security checks.
How to boost your Social Security benefit
If your benefit isn't as high as you'd hoped, there are ways to improve it. The number you see assumes that you will earn the same amount that you earned last year every year from now until retirement. But this probably won't be the case for most people. As your income changes, your Social Security benefit will as well.
The best way to boost your benefit is to work for a minimum of 35 years, because your benefit is based on your average monthly earnings during your 35 highest-paid years. If you haven't worked for at least that long, you will have zeros factored into your average, which will reduce your benefit. Working longer than 35 years is helpful because most people tend to earn more later in their careers than they did when they were just starting out. Lower-earning years will drop off and be replaced by higher-earning years, and your overall benefit will rise.
You can also take steps to boost your income, like pursuing promotions, picking up an extra job, or switching to a more lucrative field. Alternatively, you can delay your benefits until full retirement age or until you'd qualify for your maximum benefit at 70. With a My Social Security account, you can see what kind of a difference that can make in your monthly checks.
A realistic idea of how far your Social Security benefits will go in retirement will help you determine how much you need to save on your own. Creating a My Social Security account only takes a few minutes, and it can give you an accurate measure of where you stand. If you check in every year or two, you'll see how your benefits are changing and can adjust your retirement plan accordingly.
The $16,728 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.