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We'll start with the sound-bite answer first -- and dig down a bit later. If you earn $75,000 per year, you can expect to receive $2,358 per month -- or about $28,300 annually -- from Social Security. While that alone might not be enough to continue living your current lifestyle, it will no doubt be a major contributor to your retirement income.
But there are a host of variables that can change this. To understand how they all interact, let's investigate the two biggest factors at play.
Lifetime earnings
For starters, if you are taking in $75,000 per year, you're doing pretty well compared to the average American. Last year, the median household income -- which includes all members of a family -- in America was $56,516.
But the amount you're earning right now isn't all that matters when it comes to Social Security. That's because your full benefit is computed by taking the inflation-adjusted average of your 35 highest-earning years on record.
It might sound daunting to go back and calculate all of that right now, but the Social Security Administration has a handy calculator that does the heavy lifting for you right here.
Once you figure out your average earnings from those 35 years, the calculation of your annual benefits is pretty simple.
- You will receive 90% of the first $10,620on your average earnings (maximum of $9,558 annually).
- You will receive 32% for every dollar between $10,620 and $64,032 (maximum of $17,092 annually).
- You will receive 15% for every average dollar over $64,032 (maximum of $5,594 annually).
While your salary in the years to come is hard to predict, I usually like to assume that it'll decrease slightly every year until I retire, to build in a margin of safety for planning purposes.
When you retire matters
For those born before 1955, full retirement age clocks in at 66. But for those born after that date, full retirement age ranges between 66 and 67 years old.
But the important thing to note is that anyone can claim their Social Security benefits between age 62 and age 70. There is, of course, a trade-off: those who claim their benefits earlier have reduced payouts, while those who claim later can actually get more than their "full benefits."
To put this in perspective, let's assume that the person in question has earned an average of $75,000 and was born before 1955. Here's the annual payout that this individual can expect from Social Security, depending on their year of retirement.
Data source: IRS, author's calculations. All figures rounded to the nearest $10.
It should be noted that the Social Security Administration usually discusses such figures in terms of monthly benefits. I chose to do this in terms of annual benefits, because it is typically the way we think about the amount of money we need to maintain a certain lifestyle.
When should you claim?
There's no one-size-fits-all answer to this question. There are a million variables to consider, including the type of lifestyle you have, how much you enjoy your current job, your relative health, and what you want to do in retirement...to name just a few.
I've long been a proponent of taking Social Security as soon as possible, as long as all of your basic needs will be met. Study after study has shown that people enjoy record levels of happiness, contentment, relaxation -- and record-low levels of anxiety -- once they enter retirement. The freedom over time and what you are focusing on is far more beneficial than many expect it will be.
For that reason, I think it's wise to claim as soon as possible -- even if you like what you're doing. It offers you flexibility, and that flexibility can go a long way in helping you to enjoy the retirement you've earned.
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FAQs
If you earn $75,000 per year, you can expect to receive $2,358 per month -- or about $28,300 annually -- from Social Security. While that alone might not be enough to continue living your current lifestyle, it will no doubt be a major contributor to your retirement income.
How much Social Security will I get if I make $80,000 per year? ›
Here's a summary tally of those starting benefits: Final pay of $80,000: benefit of $1,744 monthly, $20,929 yearly. Final pay of $100,000: benefit of $2,026 monthly, $24,315 yearly. Final pay of $125,000: benefit of $2,407 monthly, $28,889 yearly.
How to determine how much you will receive from Social Security? ›
Social Security benefits are typically computed using "average indexed monthly earnings." This average summarizes up to 35 years of a worker's indexed earnings. We apply a formula to this average to compute the primary insurance amount (PIA). The PIA is the basis for the benefits that are paid to an individual.
How much Social Security will I get if I only made $20,000 a year? ›
If you earned $20,000 for half a career, then your average monthly earnings will be $833. In this case, your Social Security payment will be a full 90% of that amount, or almost $750 per month, if you retire at full retirement age.
Will I get Social Security if I only worked 10 years? ›
The number of credits you need to receive retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (10 years of work). If you stop working before you have enough credits to be eligible for benefits, the credits will remain on your Social Security record.
Is it better to take Social Security at 62 or 67? ›
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
Is Social Security based on last 3 years of work? ›
Social Security bases your retirement benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then we calculate your average indexed monthly earnings from your highest 35 years of earnings.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
How do I get the $16728 Social Security bonus? ›
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
What is the average Social Security check at age 62? ›
According to recently released data from the SSA's Office of the Actuary, just over 590,000 retired-worker beneficiaries were receiving $1,298.26 per month at age 62, as of December 2023. That compares to about 2.11 million aged 66 retired-worker beneficiaries who were taking home $1,739.92 per month.
If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. The chart below explains how delayed retirement affects your benefit.
How much should you expect from Social Security if you make $30,000 a year? ›
Deduct what you'll get from Social Security
The general rule is that Social Security benefits replace about 40% of pre-retirement income. With $30,000 in annual income, that means you could receive an estimated $12,000 per year in Social Security payments, without adjusting for inflation.
Is $1500 a month enough to retire on? ›
While $1,500 might not be enough for non-housing retirement expenses for many people, it doesn't mean it's impossible to stick to this or other amounts, such as if you're already retired and don't have the ability to increase your budget.
How much Social Security do I get if I make $100 000 a year? ›
If your highest 35 years of indexed earnings averaged out to $100,000, your AIME would be roughly $8,333. If you add all three of these numbers together, you would arrive at a PIA of $2,893.11, which equates to about $34,717.32 of Social Security benefits per year at full retirement age.
What is the maximum Social Security benefit for a single person? ›
The maximum Social Security benefit at full retirement age is $3,822 per month in 2024. It's $4,873 per month in 2024 if retiring at age 70 and $2,710 if retiring at age 62.
What is the highest monthly income you can get from Social Security? ›
The maximum Social Security benefit you can receive in 2024 ranges from $2,710 to $4,873 per month, depending on the age you retire. "Maximum benefits can be received by delaying the start of benefits until age 70 since benefits increase by about 8% for each year you delay beyond full retirement age.
Do rich retirees get Social Security? ›
How Much More Social Security Do the Richest Retirees Get Compared to the Average American? Rich retirees get more Social Security than those who didn't earn as much throughout their career. And that makes sense since benefits are based on your earnings history.
