Social Security benefits will be a major source of retirement income for most Americans. Yet, shockingly, only some people have a good idea of how much they will receive in benefits from Social Security. In fact, new research from the National Institute on Retirement Security says just 11% of Americans who haven’t yet retired know precisely how much they will receive from Social Security.
According to the survey of 1,200 individuals aged 25 or older, 22% of respondents said they had no idea at all how much their future Social Security benefits would be. I’d be willing to bet that even more people have a false sense of what they expect to get from Social Security in the future.
Social Security is a significant source of income for retirees. In 2024, around 68 million people will receive some amount of Social Security benefits, amounting to about $1.5 trillion paid to Americans. The average retiree benefit from Social Security is $1,918 per month in 2024. For the higher earners reading this post, the monthly maximum retirement income Social Security benefit for a person retiring in 2024, at their full retirement age, is just $3,822 per month.
You shouldn’t wait until you are about to retire to find out what type of Social Security benefits you are eligible for. If you receive more than you expect, you may be able to save less into other retirement accounts and enjoy life a bit more. On the flip side, if your Social Security benefit is less than you are guessing, finding out early will allow you time to make up for missed retirement income.
How You Can Get Your Own Social Security Estimate
To help you estimate your future benefits, the Social Security Administration provides detailed statements each year.
Individuals can check their records online by creating a “My Social Security” account. Workers aged 60 and older who do not have online accounts can still receive hard-copy statements via snail mail.
What Will Your Social Security Estimate Tell You
As you probably guessed, your Social Security estimate can give you a sense of what your future retirement income from Social Security could be.
For example, if you’re currently earning around $20,000 a month, and your Social Security statement shows an estimated $4,000 monthly benefit, about 1/5 of your pre-retirement income may be replaced by Social Security benefits. You will likely need to combine working longer or have other substantial retirement assets to avoid a significant drop in your standard of living in your golden years.
Please remember that the statements are just a snapshot in time, as they don’t project wage increases or future Social Security cost-of-living adjustments. If you are 22 and just out of college, your future Social Security estimate will probably look pretty paltry. Likewise, if your earnings history falls short of 35 years, your Social Security estimate may overstate the benefit you will likely receive.
Checking Social Security Estimate Age 62+
For those of you who are near ages 62 to 70, the big benefit to checking your Social Security statement each year is to see how the cost-of-living adjustments affect your future Social Security benefits. You also want to ensure that your current income is being reported properly each year.