Americans who have earned 40 Social Security Pension Eligibility credits can choose to receive their hard-earned eligibility prior to reaching full retirement age. Those who are 62 years old can choose to apply for a retirement pension.
However, this could permanently reduce your future monthly payments by almost 30 percent. Depending on your age, how much can you expect when you retire?
How is your retirement pension calculated?
The Social Security Agency will calculate how much you will get, taking into account various factors. But the two most important inputs that will determine your future utility are your average career income and your retirement age.
To be entitled to pension benefits You need to purchase up to 40 credits the maximum number that You can get 4 every year, So you have to work for at least 10 years. However, some people take longer to earn these credits and that doesn’t take into account the second factor.
The Social Security Agency also calculates the average of the 35 highest income years of your career. If you have worked for less than 35 years, the number of years with no income from work would be zero, Here’s how to lower your average. Note that you will not get more than 40 credits even if you earn it in 10 years and keep working.
What are the maximum amounts that you can get?
The average Social Security pension benefit in 2021 is $ 1,565 per month, but will be significantly higher in 2022 due to the Cost of Living Adjustment (COLA) 2022 announced on Wednesday. Beneficiaries will see a 5.9 percent increase in monthly payments The average rises to $ 1,657, or an increase of $ 92.
If you turn 62 in the next year, you can receive benefits for a full month after you were 62. The maximum you can expect after the increase in 2022 is $ 2,461. However, early retirement can limit the amount of your pension because you will receive it over a longer period of time.
If you wait to reach full retirement age (FRA), the maximum you can get is $ 3,334 after the correction for COLA 2022. The full retirement age for those born in 1955 is 66 years and 2 months. For those born each subsequent year, you need to add two months per year up to 1960 and after reaching full retirement age when they turn 70.
Currently, those who will be 70 years old in 2022 their maximum potential benefit could increase to $ 4,220. You can check your own estimated monthly benefits using the Social Security Administration online calculator tool. You need to know your annual income for the past 35 years or use an estimate.
The social security authority provides a calculation of how much of your benefits would you lose if you chose to retire before full retirement age? compared to waiting to be 70 based on 2021 numbers. If a person of full retirement age is receiving $ 1,000 per month in benefits, a person who retired at 62 would get just $ 708 a month by comparison. While those who wait until the age of 70 would receive $ 1,253 a month.
Comparison of retirement age and monthly benefits.
Age You Choose to Receive Benefits
|66 + 10 months (FRA)||$ 1,000|
Source: Social Security Administration based on a person born in 1959