How Is Social Security Calculated?

Social Security is a cornerstone to any retirement plan. And people have a choice about how big or how small it ends up for them. However, the amount you get is based on 2 things…. How much money you made in your career and WHEN you choose to claim your benefit.
This video talks about how Social Security is calculated.
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🔑 Key Topics :
0:00 - Intro
1:00 - How Is Social Security Calculated?
2:23 - Social Security Terms
5:00 - Will Working Longer Increase My Benefit?
5:45 - What if My Earnings Are Less?
6:30 - Will Working past 70 Increase My Benefit?
7:54 - Conclusion
9 Questions - • Ask These 9 Questions ...
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[@jonathangoodwin646]

So security is good for me I get $1877 I get cola Every year Top of that I get a pension I make almost as much what I did at the University of California I only difference is 400 less and that's great.

[@johnurban7333]

I heard on another TH-cam video that they adjust your older earnings to 2023 (example $8000 would be $28000 now) so you’re better off making less money

[@brindleandbay]

Agree with the first part, not sure about the second part. Thanks for commenting!

[@ChaseNoStraighter]

The benefits calculator on the SS site only increased payments on a yearly basis but text in other locations says it goes up every month. Which is correct and is there a formula for this somewhere?

[@brindleandbay]

One reason that it goes up monthly is the penalty for early claiming. This formula for the penalty is found on the SS gov website.

[@davidonewayticket3388]

So u need 10 yrs in order to qualify? What if a person only works for 10 yrs? Would that person receive less than a person working all their life earning the same amount.

[@brindleandbay]

Usually yes! www.ssa.gov/myaccount/assets/materials/additional-work.pdf

[@Bob-yh7ir]

Coming up on 57 years old and going to retire before I hit 58. I ran my numbers out as if I would have worked longer, replacing some lower years, etc. and it doesn't really make sense for me to work another say 5 years until 62, because it will only increase my monthly SS by about $110 at FRA !! So working 5 years to get 1300 more a year is a sound NO Not worth it. I mean if a couple hundred bucks a month makes or breaks your retirement plan, you didn't have much of a plan, I would say.

[@brindleandbay]

Nice assessment Bob. From a pure SS decision that can make sense. Working longer is usually for other benefits like more years to save, less years until Medicare etc.

[@deniseholloway8941]

Question, Are my SS benefits taxed if I am working after 70 with a high income?

[@Satjr35031]

Yes likely 85% since you said high income

[@Pkerr1000]

I'm retiring at 70 (currently 69) and will be applying for my benefits. My wife (currently 65) never worked enough to get her "own" benefits. I understand she will qualify for 50% of what i get. Does she have to wait until she is 70 to receive that 50% or will she get it as soon as I start getting getting it.
Thanks

[@brindleandbay]

She will only need to be full retirement age to get up to 50%

[@Pkerr1000]

@@brindleandbay Thanks..! And why the "get up to 50%" Isn't that automatic?

[@brindleandbay]

@@Pkerr1000 Not if a spouse claims that benefit before their full retirement age and not if their own benefit exceeds half of their spouse.

[@Pkerr1000]

@@brindleandbay Ahhh... gotcha. She will be full retirement age when I start my benefits and here benefits will not exceed half of mine.
Thanks!

[@bernie9728]

Here is the mistake almost all of the videos make. The mistake is that more per month does not mean mean more total money. The reason you get more per month at 66 and 70 is because you are going to get fewer payments. The person who take the money at 62 will draw 48 more payments than the person who waits until age 66 and 96 more checks than the person who waits until age 70. It's not magic, it's math. You will need to live until age 80 for waiting to make you any increase at all. So first you start with the date of your death. If you don't have that date, then look at family history. If you don't have a history in your family of living well past 80 years old, then waiting is a big gamble. I chose to take my SS at age 62. That was 7 years ago. Not once in those 7 have I ever second guessed my decision. Retirement is everything I hoped it would be and I am glad I retired at 62 and I'm glad I started my Social Security at that time. Waiting is a suckers bet. I took the sure thing.

[@brindleandbay]

Glad retirement is going well for you! Thanks for contributing to the conversation. Financial planning answers are rarely black and white and wisdom is required on a case by case situation.