2 Replies Latest reply on Apr 15, 2012 1:44 PM by AnnaLee

    Social Security monthly benefit calculation

    mol
      I'm new to this site and was wondering what the monthly social security benefit calculation is based upon. I have heard it's based on your last five years of earnings and have also heard its based on your three or five highest salary years. I'm 58 and considering cutting back to part-time but want to see how this decision may affect my monthly SS benefit. Thanks for your input.
        • Re: Social Security monthly benefit calculation
          JRR
          In 2007, with economy headed south, I lost my job - thougt I may have to take Social Security benefit at 62. Fortunately, I got another job in 2008 and justy started collecting Social Security benefits  while still working, and my benefit some 35% higher than the 2008 estimate; because I started collecting six months short of 66, I get  about 3.5% less than full benefit, with credit for 2011 and 2012 earnings yet to be added.   
          That should give you a fair idea - each year could mean about 6-8% more. 
          • Re: Social Security monthly benefit calculation
            AnnaLee
            mol said...
            I I\'m 58 and considering cutting back to part-time but want to see how this decision may affect my monthly SS benefit. Thanks for your input.

            First of all, SS is based on the wage adjusted highest 35 years that you paid into it.
             
             
            If you know your earning taxed for SS, you can download AnyPIA.exe and find out exactly what the effect of different scenarios is:
             
             
            If you have a recent SS statement (before they quit sending them), most of the numbers you need to input can be found on it. Otherwise, your W2's have these numbers.
             
            However, by the time I retired I had over 40 years and, usually, when you have that many years additional years make little to no difference in your benefits. This is because the taxed wages are "waged indexed" for changes in wages (wage inflation) over the years.