Social security increase5/16/2023 The maximum Social Security benefit changes each year. Yes, there is a limit to how much you can receive in Social Security benefits. It’s a big perk that doesn’t get a lot of attention. For many people, Social Security is the only form of retirement income they have that is directly linked to inflation. That means the retirement income you collect from Social Security has built-in protection against inflation. The Social Security Administration also makes annual Cost of Living Adjustments, even as you collect benefits. They give you a big fat “zero” for each year you don’t have earnings, so people who worked for fewer than 35 years may see lower benefits. The Social Security Administration takes your highest-earning 35 years of covered wages and averages them, indexing for inflation. How Does the Social Security Administration Calculate Benefits? Photo credit: © iStock/KenTannenbaumīenefits also depend on how much money you’ve earned in life. The bottom line: You’re eligible for Social Security Benefits if you’ve paid into the system for at least a decade, but your actual benefits will depend on what age – between 62 and 70 – you begin to claim them. Conversely, you can claim as early as age 62, but taking benefits before your full retirement age will result in the Social Security Administration docking your monthly benefits. But if you claim later than that - you can put it off as late as age 70 - you’ll get a credit for doing so, with larger monthly benefits. You are eligible for your full benefits once you reach full retirement age, which is either 66 and 67, depending on when you were born. Who Is Eligible for Social Security Benefits?Īnyone who pays into Social Security for at least 40 calendar quarters (10 years) is eligible for retirement benefits based on their earnings record. That's why it’s important to know all the rules surrounding eligibility, benefit amounts, taxation and more.ĭo you need help managing your retirement savings? To find a financial advisor who serves your area, try our free online matching tool. And even if you have other income sources in retirement, Social Security can make up a significant part of your retirement income plan. Still, many people do find themselves in the position of having to live off their Social Security checks. After all, Social Security wasn’t designed to make up a retiree’s entire income. And regardless of whether you think Social Security’s future is secure, the fact remains that you shouldn’t plan on living exclusively off your Social Security benefits. These days there’s a lot of doom and gloom about Social Security’s solvency - or lack thereof. Calculate My Social Security Income Photo credit: © iStock/Zinkevych
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