How to Figure Out What You'll Get From Social Security

(This article is adapted from Social Security: The Inside Story 2016 Edition by Andy Landis.)

As you get closer to collecting Social Security benefits, you’ll want to get a rough idea of how much you’ll actually receive. Here’s how to do that:

Social Security statements, which provide a personalized estimate of your Social Security retirement, survivors and disability benefits, are mailed to workers turning 25, then every five years on “speed limit” birthdays — 30, 35, 40, etc. After 60, they come annually until you file for Social Security.

But there’s a better way to get these estimates anytime. Your Social Security information is available online at the Social Security website. Just set up a “My Social Security” account.

Keep in mind, however that these estimates are in current dollars, so they don’t account for future inflation and they assume you’ll continue to work at last year’s income level (or the last year posted) until the ages shown.

Social Security also offers online and downloadable calculators to provide a quick estimate of your future benefits. You can get to each of them by clicking on the specific link in the Calculators section of the Social Security site.

The calculators are even more powerful if you request two (or three, or more) estimates to compare several different retirement options, such as early vs. late retirement, or part-time vs. full-time work until retirement.

The calculators are:

You simply input your date of birth, this year’s earnings and your expected retirement date. The output is a rough estimate of your retirement, disability and survivor benefits. It projects your current earnings backwards and forwards to perform the estimate.

That would be accurate only if you’ve had steady earnings for your whole life. But you can fine-tune the earnings amounts. From the estimate page, click on “See the earnings we used” for a chance to input your actual earnings, rather than the projected amounts. The resulting estimate will be closer to your actual future benefits.

You can find your actual past earnings from any previous Social Security Statement you saved, from your tax records like W-2s or by calling Social Security at 800-SSA-1213 and requesting your earnings record.

For a much more accurate estimate, however, click on the “Online Calculator” link and input your date of birth, estimated future earnings and expected retirement date. The catch is that you must input all your past earnings, year by year.

This program is much easier to use than the Online Calculator because it already knows your past earnings. You can use it if you have enough work credits to be eligible and haven’t applied for Social Security or Medicare. Click the “Estimate Your Retirement Benefits” button.

Once you fill in your request, you’ll get an estimate based on actual past earnings and the future earnings you can post.

To model additional scenarios, click the “Add a New Estimate” button. You can run “what if” scenarios by changing your stop-work age and future earnings estimates.

The Estimator can only estimate retirement benefits, not survivor or disability benefits, however.

For even more forecasting ability, download the ”Detailed Calculator.” (There's a separate version for Mac users.)

It can compute retirement, disability or survivor benefits for any earnings history you input and provide the numbers behind these calculations in detail. In short, it’s the ultimate wonky calculator. The only caveat is that the user interface is, well, kludgy. (It helps if you have a background in Social Security computations.)

The calculators can help you get answers to these common Social Security questions:

Getting the answer from the Social Security Administration is fairly easy — just get an online estimate for yourself and have your spouse do the same. With the estimates in hand, check to see if your own benefit is less than the payment you could get as a spouse (currently 35 to 50 percent of your spouse’s Full Retirement Benefit.)

If you are widowed, divorced, or separated, call Social Security (800- SSA-1213) and explain that you might be eligible on your spouse’s record and need an estimate. In many cases, the representative can give you an estimate over the phone.

There is a related question: Should I keep working to try to get a higher benefit on my own record? Or am I going to draw a spouse payment anyway?

If your own benefit is very close to what you would receive as a spouse, you may wonder if there’s much incentive to work for a higher benefit on your own record. To determine where you stand, try this:

• Get one estimate showing little or no future work.
• Get another estimate showing your current wages continuing.

Reviewing the estimates, see if stopping work keeps your benefit below what you would receive as a spouse. Also, see if continuing work boosts your payment above what you would receive as a spouse. Consider whether postponing your own payment to age 70 would make a difference. If your spousal payment will always exceed your own payment, continuing to work will not raise your Social Security.

This is one of the most frequently asked questions. A variation of the question is “I want to retire early, at age 58 (or 55, or 60), but how much will my Social Security be reduced because of early retirement?”

The Social Security calculators can give you the answer:

• Get one estimate assuming a late retirement date, say age 66.
• Get a second estimate assuming an early retirement date, say age 58.

With the estimates in hand, compare the Social Security amounts. How big is your “penalty” for early retirement? Can your personal finances afford the difference? These considerations will help you determine your best retirement date, especially if you consult with a financial planner.

Phased retirement is becoming a very attractive option for many. In phased retirement, you reduce your work to part-time to “ease into” retirement during your last few years at work, thus splitting the difference between working steadily to age 65 and retiring early. A similar strategy is to change work to something that pays less but you love more.

The question then becomes, “How much will my Social Security be reduced because of lower earnings in the last few years before retirement?”

To answer this, get two estimates:

• On one, show your projected retirement age and show your current full-time earnings as your future earnings.
• On the other, show the same retirement date, but make your future earnings about half (or 1/3, or 2/3, etc.) of your current earnings.

Reviewing the estimates, you can quickly compare your future Social Security payments under each option.