Social Security benefits act as a stable source of income for tens of millions of Americans each month. The Social Security Administration (SSA) is the agency tasked with overseeing the program and ensuring payments roll out to beneficiaries according to schedule. The amount that a beneficiary will receive as their monthly benefit differs from person to person due to the various factors that have to be taken into consideration when the calculation is being done.
Oftentimes, seniors nearing retirement age simply rely on estimates provided to them by the Social Security Administration, however, the agency’s estimates often assume an unchanging income figure until the point of retirement even though this is not always the case. This is not to say that the SSA’s estimations are entirely incorrect by any means, however, a benefit estimation more tailored to your specific situation can also be achieved whilst still using the calculator tools found on the agency’s website. Here is what you need to know.
How are Social Security benefit amounts calculated?
The two major factors that determine exactly how much you will qualify to receive in benefits upon retirement are the income earned during your working years, and the age at which you begin claiming. Social Security can be claimed starting at age 62, however, this is considered as “claiming early” because the program uses a Full Retirement Age as well.
In order to better accommodate for a growing life expectancy without causing the program to go insolvent, the Social Security Amendments of 1983 stipulated that the Full Retirement Age would be gradually increased in increments of two months until it reached 67 years of age. As of 2025, the Full Retirement Age has increased to 66 years and ten months for those born in 1959, and in 2026, it will increase by two months one last time making the Full Retirement Age 67 for those born in 1960 and later.
As such, it is important to note that claiming benefits any time from age 62 until your FRA will lead to a reduction in benefit amounts of up to 30%. Conversely, holding off from claiming past your FRA until you are 70 will result in a higher benefit amount than what you would have received at your FRA. However, for some, claiming early may be more beneficial than waiting until their FRA or delaying it even further.
Subsequently, in order to determine when is the most optimal time for you to begin claiming, the SSA has provided several calculator tools on its website through which you can estimate how much you will receive in benefits upon retirement.
How to accurately estimate your benefits
The benefit amount estimates given to you by the agency are based on the assumption that you will be claiming at your Full Retirement Age, and that you will be earning the same income figure up until you retire. For a fair number of people, however, neither of these factors remain as constant as the estimations assume and as such, your benefit estimations end up less accurate than desired.
Subsequently, according to experts, you can estimate your retirement income more accurately by doing the following:
The first step is to log in to your my Social Security account and toggle your way to your Social Security statement which contains the SSA’s estimated benefit amounts. You will then find the Retirement Calculator which will allow you to input your future earnings and retirement age to get a closer estimation of what your retirement income will look like.
From here, you can play around with various retirement ages to see what age would work out best for your situation. Another way to produce a realistic estimation is to set your future earnings to zero. By doing this, the assumption is that you have stopped working as of today and subsequently, you could view how much of your projected benefit has already been locked in. Alternatively, you could also adjust your earnings to reflect a part-time income or a lowered income figure.