# How to Estimate Your Social Security Benefits

By

Image source: SSA Office of the Inspector General.

Millions of people expect that they'll rely on Social Security benefits in the future to help them in retirement. Yet many of those people have no idea how to estimate the amount they'll receive each month from Social Security. Fortunately, there are some simple ways to come up with estimates on what your Social Security benefit will look like down the road.

What the actual calculation looks like
Calculating your Social Security benefit involves a lot of work. The Social Security Administration looks at your earnings throughout your career, applying an index factor that takes inflation into account for the early years of your work history. After indexing all earnings for comparison purposes, the SSA takes the 35 years with the highest indexed earnings. It then adds the figures for all 35 years together and divides by 420, the number of months in those 35 years.

The result is your average indexed monthly earnings, but this is only the starting point for your actual benefit. You'll then need to use a special formula to come up with your primary insurance amount. For those turning 62 in 2016, you take your average indexed monthly earnings. Multiply the first \$856 of that amount by 90%. For every dollar between \$856 and \$5,157, multiply by 32%. Finally, add in 15% for any amounts over \$5,157.

The primary insurance amount gives you your baseline monthly benefit if you take payments at full retirement age. However, that's not the end of the calculation, because you then need to incorporate any adjustment for taking benefits earlier or later than your full retirement age. For those whose full retirement age is 66, your benefit can be as little as 75% of your primary insurance amount if you claim at age 62, or as large as 132% of your primary insurance amount if you claim at age 70.

An easy cheat sheet
The SSA knows that doing this calculation is complicated, so they've offered a number of resources you can use to estimate your benefits. The Social Security Quick Calculator can give you a cut-and-dried estimate based on your current earnings. In doing so, it makes assumptions about your past and future earnings. If those assumptions are wrong, then the estimate will be inaccurate. But for those who have relatively smooth earnings over their careers, the quick calculator is a good starting point.