How can I calculate the exact amount of my Social Security check in June?
Thinking of retiring soon? Here is how to calcuate what your Social Security benefits would have been worth in June 2024.
Nearly 67 million people in the United States receive payments from the Social Security Adminstration (SSA), and if they don’t already, they most likely will rely on benefits at some point in their lives. The largest group of beneficiaries are retired workers. 50.8 million retirees receive a Social Security check monthly with an associated average value of $1,915. Thanks, in part, to the 2024 COLA of 3.2 percent, the average check size received by retired workers has grown by $1,834. In addition to the COLA, the average tends to increase because new beneficiaries often earn higher incomes than current retirees. Upon their retirement, they receive a higher Social Security payment.
How are Social Security payments calculated?
The SSA bases the Social Security entitlement on data gathered throughout your working life, forming an earnings record. This information is then used, with a three-part process, to calculate the size of payments:
- Average Indexed Monthly Earnings (AIME) – The SSA uses your 35 best-paid years to calculate your AIME, essentially a snapshot of your historical earnings. The more you earn, the higher your monthly entitlement, up to a maximum threshold of $168,200 (as of 2024).
- Age of claim – If you decide to claim Social Security before you reach full retirement age, your monthly entitlement will decrease. This is done on a sliding scale, with more than a quarter of the payment size being lost if you claim at the age of 62. Alternatively, if you delay the payment until you are 70 you can add up to 30% to your payment amount.
- Primary Insurance Amount (PIA) – Assuming that you wait until full retirement age (currently 66 years and two months) before claiming Social Security, your PIA is the amount you’ll receive each month from the SSA.
Your PIA is comprised of:
- 90% of the first $1,115 of your AIME;
- 32% of any amount over $1,115 up to $6,721;
- and 15% of any amount over $6,721
Those considering early retirement should be aware that their Medicare benefits will not kick in until they are 65, meaning they will have to purchase insurance during the in-between period.
How to calculate your Social Security entitlement
Calculating your Social Security monthly payments can be confusing, and picking the opportune moment to claim the benefits can be crucial for your long-term financial stability.
Fortunately, the SSA provides two easy-to-use online tools that allow you to check your earnings history and estimate your future Social Security entitlement.
The first is your Social Security Statement, which allows anyone over the age of 18 to see the current situation. The statement can be access through a mySocialSecurity account, and lists how much you have paid in so far, your current AIME and other important financial details.
The second is the Retirement Estimator, which uses your actual Social Security earnings record to calculate your monthly payments when you decide to claim. However, bear in mind that this is just an estimate and could vary if your personal situation or the Social Security benefits program changes.