Based on past and projected future earnings, the estimate is just that: an estimate. But it is useful information when calculating retirement income, as long as you keep in mind that it is not the final number.
With retirement around the corner for millions of Baby Boomers, many are taking a look into their retirement income and wondering how much they’ll be receiving from Social Security and when their benefits statement will arrive.
Kiplinger’s recent article, “How to Estimate Your Social Security Benefit,” explains that you’ll receive a statement once every five years from age 25 to 60. After 60, you get one annually, until you start receiving benefits.
The statements are sent via U.S. Mail about three months before your birthday. However, you can also generate a benefit estimate anytime you want with a My Social Security account. That website is www.ssa.gov/myaccount.
Your estimate is calculated based on your past earnings and a projection of your future income. This estimate assumes your income will remain at the same level as the previous year until you retire. It’s possible you could receive more than the estimate if you wind up earning more in the future. You could also get less if your income decreases.
Your Social Security benefit estimate also assumes that you’ll keep working until you take benefits at age 62, at full retirement age or at age 70. As a result, the statement may not be that instructional if you plan to retire at a different time.
There’s also an online calculator that can be helpful: www.ssa.gov/planners to enter your future earnings estimates. Remember that every situation is different and circumstances change, so going online to check your benefits and using the available tools will help prevent any unpleasant surprises.
Reference: Kiplinger (February 2017) “How to Estimate Your Social Security Benefit”