In 2015, the maximum monthly Social Security benefit for those claiming benefits at the current full retirement age of 66 is $2,663 per month, or $31,956 annually. Workers receiving this benefit earned the maximum taxable earnings for 35 or more years. The maximum monthly benefit changes each year with changes in wage levels.
That sounds pretty good until you realize that the average monthly Social Security retirement benefit in January 2015 was $1,328, or $15,936 annually. The average monthly benefit changes each month because of the ebb and flow of retirees applying for Social Security retirement benefits.
Average benefits are much lower
While the maximum benefit in 2015 for those who file at their full retirement age of 66 is $2,663, those who file at age 62 in 2015 receive a maximum benefit of $2,025. Those who waited until age 70 in 2015 and earned delayed retirement credits would have a maximum benefit of $3,501 per month, or $42,012 per year.
The average monthly benefit doesn't really lend itself to calculating the reduced benefit at age 62 or the increased benefit by waiting until age 70 to file. For someone at the full retirement age of 66, taking benefits at age 62 results in a 25% reduction in their primary insurance amount, with a 30% reduction for a spousal benefit. Waiting until age 70 results in a 32% increase in the primary insurance amount for someone at the full retirement age.
Don't wait 5 years to see where you stand
While Social Security sends out benefit statements every 5 years, showing your wage history and projected benefits, you can view it anytime by setting up a Social Security online account to view estimated future benefits if you're not yet claiming them or to manage them if you're already receiving benefits.
By managing benefits, I mean making a change of address, starting or changing direct deposit, and getting a replacement Medicare card or replacement Social Security forms for tax season. As of the end of July, there were 20.3 million Social Security accounts.
Can you live on just your Social Security benefits? The Social Security Basic Facts from 2014 reports that, "among elderly Social Security beneficiaries, 22% of married couples and about 47% of unmarried persons rely on Social Security for 90% or more of their income."
What percentage of your retirement income comes, or do you expect to come, from Social Security?
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