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What to expect from your future Social Security benefits

Knowing what to expect from Social Security benefits can help you plan for retirement.

Older man at work

Determining your Social Security benefits is an important aspect of retirement planning, especially if you plan to rely on them during your retirement years.

According to the Center on Budget and Policy Priorities, around 97% of senior citizen Americans receive or will receive Social Security benefits. For half the seniors, Social Security provides 50% of their income, and for one in four it's 90%. In June 2020, the average monthly benefit for a retired worker was $1,514 a month which accounts for about 40% of their past earnings.

You can get an estimate of your benefits at the SSA website. The Retirement Estimator calculator accesses your Social Security earnings record when you provide your name, Social Security number, date, place of birth and mother's maiden name. Keep in mind that even though the estimate is based on your actual earning record, it is still only an estimate. Your actual benefit amount will be determined when your benefits begin, and will probably vary slightly from your estimate due to updates in your earnings record, inflation, and assumptions the calculator makes about your future earnings and length of employment.

Wondering how the U.S. government determines Social Security benefits? Besides how much you earn during your lifetime, the calculation is based on your full retirement age, when you retire and whether you continue working while collecting benefits.

What is my Social Security full retirement age?

Your year of birth determines your full retirement age, or the age at which you are eligible to receive your full retirement Social Security benefit. Those born in 1937 or before have a full retirement age of 65. The full retirement age increases slowly for those born after 1937; at 1960, the full retirement age hits and remains 67.

Retiring on Social Security

You don't have to wait until your full retirement age to retire. You can retire either earlier or later, although both will affect your Social Security benefits.

You can begin collecting benefits as early as age 62 — but doing so reduces your benefits by as much as 30%. Keep in mind that your benefit amount will not readjust once you reach full retirement age. The reduction is permanent, to compensate for drawing on Social Security for a longer period of time.

Delaying retirement increases your benefits. In addition to your adding years of earnings to your Social Security record, you'll receive a delayed retirement credit until age 70.

Working during retirement

You can work after you begin collecting Social Security, but your benefits will be reduced $1 for every $2 you earn over the current earning limit until you reach your full retirement age. Good news, though: Once you hit your full retirement age, your benefits are recalculated, taking into account the months that benefits were withheld. Plus, you can then work as much as you want, with no earning limits.

Know your benefits

Take into consideration the factors that determine your Social Security benefits when you're deciding when to retire and when to begin collecting benefits. Knowing how much you'll receive, and when, may be a key factor in planning your retirement years.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

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