A lot of people don’t retire and live on social security benefits alone because they can’t cover their bills.
If they can manage to get the maximum amount of benefits though, they may be able to live on that.
For 2021, the maximum amount is $3895. Most people aren’t going to end up being eligible for it, but here’s how to try to gauge whether you’ll be one of the lucky ones.
What are some ways that can show you early on what you’ll collect in benefits?
One way to try to get a good guess at what you might take home when you finally retire, is to look at your earnings over your lifetime.
You need to hit the wage cap every year in order to max out on benefits. It changes yearly, and for 2021 is $142,800. 2022’s wage cap will be $147,000.
The number of years you would need to hit that cap is 35, any money earned over the wage cap is not counted. The Social Security Administration uses 35 of your highest earning working years to decide what you’ll get paid. Lower wages, or none at all, for a year will bring the average down.
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The age you choose to claim your benefits also makes an impact on what you’re actually paid. You can retire by age 62, but if you wait until your full age you’ll get the full amount you’re entitled to based on your wages. Before that it’s reduced. Even better, if you wait until age 70 you’ll get an 8% boost every year.
The best thing to do in life is to work toward earning the highest wages possible. You may not be in control of them, but the higher you aim, the higher the benefits will end up being. Though you may not get the maximum, you can still get a higher amount.
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