Social Security Benefits
Warning: Do not use the information on this page as your personal
To get a reasonable approximation of what your personal Social Security benefits
will be you need to go to two websites.
My Social Security is a page from
ssa.gov that allows you to sign up and get an estimate of your Primary Insurance
Amount (PIA), the benefits you will receive if you elect to retire at your normal
Early or Late
Retirement is a page that will let you calculate the percentage of your PIA
that you will receive based on the age that you plan to retire.
The actual calculation is a bit more complex.
If you happen to have the W2 for every year that you have received income, then
you might get a reasonable approximation of your PIA by downloading the PDF at
and doing the math for yourself. Just remember that the index factors given in
that PDF are only accurate to two decimal places. The Index factors are designed
to adjust your earnings for each year’s COLA increases.
Just follow the steps on the PDF, enter your annual earnings, adjust for COLA,
pick the highest 35 years, divide by 420 (the number of months in 35 years), and
then means test the result. For 2016 your benefit is 90% of the first $856, 32%
from $856 to $5,157, and 15% of the amount over $5,157.
Some Yearly Benefit Examples
Your benefit level depends on both your average income level and also the age you
choose to retire. The longer you wait to retire, the higher your benefit.
Take special note of the red numbers. A person earning $40,000 who retires at 70
gets a higher benefit than a person earning $110,000 who retires at 62.
Benefits as a Percentage of Earnings
Our politicians constantly talk about means testing our Social Security benefits.
This chart clearly shows the means testing that is currently in place. The
percentage of income returned as benefits on the $20,000 line is more than double
the percentage returned on the $110,000 line.
The second level of means testing, which will be discussed in more detail later,
is the taxation of your benefits. Individuals whose gross retirement income is
less than about $30,000 get their benefits tax free. By the $80,000 level the
IRS is taking back about 21.25% of your benefits as taxes, 25% of 85%.