Social Security in the United States is the main source of income for millions of retirees, as well as for those receiving disability or survivor benefits. But while many people wonder how much they will get when the time comes, not everyone knows how the monthly payment is actually calculated.
The amount approved by the Social Security Administration (SSA) is not the same for everyone. In fact, there is a big difference between what someone who has contributed for decades with a good salary gets and what someone who has worked intermittently or with low income collects. That’s why understanding what factors influence the final amount can help you not only plan your retirement better, but also avoid mistakes or confusion when filing your application.
Although the system may seem complex at first, it really boils down to a few key elements. Let’s review what they are and how they directly affect your monthly Social Security check.
Earnings history is the basis for Social Security calculations
The first and most important factor in determining how much you will collect is your history of Social Security-taxable earnings. This includes the wages you got as an employee and the net income you reported if you were self-employed.
The SSA calculates your benefit based on your 35 highest-earning years. If you’ve worked less than 35 years, the system fills in the remaining years with zeros, which can significantly reduce the final amount. That’s why each additional year of work with higher earnings than previous years can improve your average and increase your future benefit.
In addition, each year’s salary is adjusted for inflation through an indexation process. This means that older salaries are recalculated based on the value of money today, so they don’t lose weight in the average.
The age at which you apply for Social Security also plays a role
The second essential factor is the age at which you decide to start getting your benefits. The system allows you to apply for retirement starting at age 62, but doing so at that time means accepting a permanent reduction in the monthly amount.
The so-called full retirement age (FRA) depends on your year of birth. For those born in 1960 or later, the FRA is 67. If you apply for Social Security before that age, your payment is reduced by up to 30%. On the other hand, if you decide to wait beyond the full age, you can get bonuses that increase your monthly check until you reach 70, which is the limit for delaying. This means that two people with the same work history can get different amounts simply because they applied at different times.
The length of your career and stability also make a difference
In addition to average earnings, the system rewards long-term consistency. It’s not just how much you earned in your best years, but also how many years you worked regularly and contributed to the program.
A person who has worked steadily for more than 35 years is more likely to receive a high payment, while those who have had interrupted careers, with periods without contributions or low wages, tend to receive more limited benefits.
In addition, if you worked outside the system for many years, in unregistered jobs or without declaring income, that time does not count. Only the years in which you contributed to Social Security through your taxes count.
Other factors that can affect your monthly payment
Although the three factors above are the most important, there are other things that can also affect the amount you get each month. For example:
- If you have other public benefits, such as a government pension that doesn’t require Social Security contributions, your payment may be reduced under a rule called the Windfall Elimination Provision.
- If you are divorced, you may be entitled to benefits based on your former spouse’s work history, provided certain conditions are met.
- If you are widowed or have minor children, the SSA may pay additional benefits to your family, which changes the total amount that goes to your household.
In all cases, the best way to estimate your amount is to create an account at ssa.gov and review your current status. The SSA updates your information every year, and there you can see an estimate of how much you could get based on your age when you apply.