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Seniors may ask, “How are retirement benefits calculated?” Your senior retirement benefits amount is calculated by the Social Security Administration (SSA) based on personal and professional information such as your age, earnings, military service, railroad employment and pensions earned through work. To determine how much you will get for your retirement benefits, you must first meet the age, citizenship and amount of contributions criteria to claim retirement through Social Security, then submit an application with the SSA and wait for the agency to calculate how much you qualify to receive. To learn more about how to estimate your retirement benefits amount, please read the sections below.

How are retirement benefits calculated?

To calculate how much you will get for your retirement benefits, the SSA takes into consideration two major factors: your year of birth and your earnings history. Your retirement benefits amount may be reduced, increased or paid in full depending on whether you claim early, delayed or full retirement in accordance with your Social Security retirement age. If you claim Social Security benefits before reaching the full retirement age, your monthly Social Security benefits amount will need to be adjusted to accommodate for the additional years your total retirement benefits amount will be divided into. Conversely, if you postpone your retirement and keep paying Social Security taxes before starting to collect SS benefits, your total retirement benefits amount will qualify for an increase.

To determine your retirement benefits amount, your current earnings will also be a significant factor. Your earnings are subject to Social Security taxes and thus contribute to your total senior SS retirement benefits amount. Unless you spent several years earning income that was not covered by Social Security, such as earnings from employment in certain state and local governments, you have paid SS taxes and contributed to your retirement benefits. To learn more about retirement benefits, download our guide today.

How to Estimate Your Retirement Benefits Amount

If you are wondering, “What is the maximum Social Security retirement benefit amount seniors are eligible to receive?” you should be mindful that there are two ways to estimate your Social Security benefits amount based on the criteria established by the SSA. The SSA can provide you with a general calculation of your retirement benefits amount as long as you are 22 years of age or older and are able to provide the following information:

  • Your date of birth
  • Your Social Security-covered earnings in the current year or, if already retired, your earnings from the last year in which you worked<
  • The month and year in which you intend to retire

This particular retirement benefits amount estimate can be calculated in present dollars or future (inflated) dollars. Additionally, if you do not provide the SSA with the month and year in which you intend to retire and have not reached full retirement age at the time the estimate is calculated, you will be given three different retirement benefits amount estimates. These three figures consider how much you will get for your retirement benefits on a monthly basis if you claim early, full or delayed retirement.

The SSA can also estimate your retirement benefits amount through a more personalized tool that will require you to provide your full name, your mother’s maiden name, your Social Security Number (SSN) and your date and place of birth. However, this Social Security retirement estimate tool may only be used if you have already earned enough credits to be eligible for Social Security retirement and are not waiting on another application for SS benefits or Medicare. To learn more, download our comprehensive guide now.

What factors may impact your actual SS Retirement benefits amount?

When you estimate your amount of senior retirement benefits, you are simply assessing what the total amount of your retirement benefits could potentially be. Your actual Social Security retirement benefits amount can only be determined after your application is received and processed by the SSA. Because estimates are not guarantees, the SSA may determine your retirement benefits amount differently for various reasons, such as the following:

  • If your earnings increase or decrease in the future
  • If your cost-of-living increases
  • If the law that determines retirement benefit amounts changes
  • If you served in the military, worked for the railroad industry or received a retirement pension through work on which you were not required to pay Social Security taxes

The SSA has issued reports that guarantee that Social Security is fully funded until the year 2034, but only 75 percent of the program is expected to be financed after that year. This may significantly impact the amount of retirement benefits you will receive on a monthly basis after the year 2034.

A portion of your Social Security retirement benefits amount may be claimed by your surviving spouse or children in the event of your passing. However, the amount of retirement benefits your family members are eligible to receive depends on the age you begin to collect Social Security benefits as well as their ages when they begin to collect your benefits after your passing.