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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.
How much Social Security will I get at 62 if I make $80,000 a 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 much you can expect to get from Social Security if you make $50000 a year? ›
Suppose you were born on Jan. 1, 1960, and had an average annual income of $50,000. As of May 2023, you would get a monthly benefit of $1,386 if you filed for Social Security at 62; $1,980 at full retirement age (in this case, 67); or $2,455 at 70.
Is it better to take Social Security at 62 or 67? ›
In terms of lifetime benefit optimization, age 67 was the second highest at around 10%. Between ages 62 and 67, the latter gave retired workers a higher statistical probability of maximizing their lifetime income from Social Security.
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.
Is Social Security based on the last 5 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.
What is the average Social Security check at 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.
At what age is Social Security no longer taxed? ›
Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.
At what age do you get 100% of your Social Security? ›
The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67.
Can a person who has never worked get Social Security? ›
But even if you never worked and therefore don't have an earnings record, you're not necessarily out of luck. If you're married (or were married) to someone who's entitled to Social Security, you can collect spousal benefits equal to 50% of your husband or wife's benefits at full retirement age.
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 #1 reason to take Social Security at 62? ›
1. You're Planning Your End-of-Life Care. Your Social Security benefits stop paying at your death, so if you die before collecting benefits, you'll have missed out on benefits entirely.
Can I draw Social Security at 62 and still work full time? ›
You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefits. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.
What does Dave Ramsey say about taking Social Security at 62? ›
Here's when Ramsey said you can claim Social Security at 62
The question focused on whether to start retirement benefits at 62 or wait until full retirement age. In response, Ramsey said that "it usually makes sense to take it early if you're going to ... invest every bit of it."
How much money can you make at 62 and still draw Social Security? ›
If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520. Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.
How much money do you need to retire with $80,000 a year income? ›
Sticking with the $80,000 example, that means you need an additional $50,000 in income a year. Assuming an inflation rate of 4% and a conservative after-tax rate of return of 5%, you should aim for a savings target of $1.3 million to fund a 30-year retirement that begins at age 67.
How much Social Security will I get at 62 if I make $40,000 a year? ›
Social Security was never meant to replace all of your work income, but it replaced a decent chunk for those who earned $40,000 consistently during their careers. The $1,580 figure is almost half the $3,333 in career monthly pay, and that doesn't include the income taxes that you had to pay on your work income.
