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Your final earnings levels will determine themselves -- and there is very little likelihood Social Security will cease to exist.
The more important issue to keep in mind is that even today, SS is not intended to be one's sole retirement income - and that reality is unlikely to change.
With 20-years remaining before retirement, you have time to get serious about retirement and ensure that by the time you get there, you've got more to work with than your SS benefit.
20 years ago if you asked me if I'd draw SS at 62 I'd have said, ''No way! I will work until 70 to get the highest amount!'' Well today I turned 62 and next month I start to draw my SS. Long-term unemployment and under-employment made that decision for me.
I look forward to financial security that I haven't had for 8 years. Bring it on! We've got a roof, we will be able to eat! Also finding out that though I seem to get ''less'' by filing early, I in fact get more checks over the years and it all balances out.
My point is, you never know what will happen in 20 years and I hope SS is still around. And I know many people for whom SS is their sole income. It will be more and more as jobs disappear and let's face it, very few hire 60+ year old workers. I am living proof of that.
Be smarter than me if you have the opportunity!
The ticking bomb here is Inflation, what seems like a livable income now becomes pocket change as the dollar loses value. It is imperative to plan very much ahead. I retired 19 years ago and cost of living has steadily risen, while increases,if any, are minuscule.
Social Security is COLA protected. Unless Congress messes with it, that is a huge advantage of Social Security over anything else in my retirement toolbox. It also makes deferring as long as possible and to age 70 if you can highly desirable. You lock in that COLA-protected benefit for the rest of your life.
Somebody age 45 kind of has to assume they'll get hit with a full retirement age bump that effectively reduces their benefit. It's headed to age 69. It's also likely they'll mess with the COLA formula to further reduce benefits.
I'm not retiring for another 20 years. Yesterday I logged into SS to see what my "expected benefit" would be when I retire, and now that my high school jobs are finally starting to drop off the list, my expected benefits are on the rise! In six years those high school and college summer jobs will finally all be replaced with real salaries, and I expect my SS benefits to increase even more - which is kind of exciting.
Of course, this is presuming that SS will still be around when I retire in 20 years...
I believe you are mistaken in how SS calculates your future expected SS benefits.
Don't they figure in that your future wage will never dip below what you are now earning when calculating your estimated future SS benefit ?
The calculation of .....expected future benefits.....is not based on what you would draw if you retired today, but what you would draw if you keep earning the wage you currently make and work until retirement. ( this is stated right in their calculation )
During my working years, Social Security would send me an Accounting Statement with some nebulous Estimated Payment at FRA (Far-Off Retirement Age). My Dad was collecting his benefit at that time.....I would just look at my FICA withholding as a direct payment to my Father. I did not expect to see any substantial amount from SS at my retirement, so I focused on my IRA and 401K and managed them as my only retirement fund.
Imagine my surprise when I filed for SS bennies and they started depositing over $2K monthly. Now if we want to hitch up the buck-board and ride into town for a Concert or Dinner at one of the many fine restaurants -- my rich Uncle Sam is picking up the tab.
The Message here has been stated numerous times on this thread. Don't rely solely on SS and do something in one of the many savings instruments available to you.
I think they take the average of your highest 35 years income. Of course that formula for calculating could change.
Yes.........when you file and want to collect.
However, if you are a younger worker their calculation estimate is not based on what you have earned so far, but based on you continuing to earn your present wage until you retire.
A few years of earning low " high school wage" will mean nothing if you work until 62,67, or 70 because they will not be needed in your .....35 highest years wage.......
A SS future estimate of your earnings presumes you will earn current wages right up to retirement with no gaps or dips in earnings.
It should be around but the more you earn the less you will get back. Remember SS is not designed to support you in retirement so you better figure out your budget now (rough estimate is ok) and make sure you are on track to have enough money in retirement. I would figure on a life expectancy of 100 for your planning at this stage.
Perhaps I'm not understanding what you wrote because a person who made $100,000+ a year for most of their lives is going to get a large Social Security check than a person who made minimum wage their whole life.
Regardless - to the OP: don't plan on surviving well on your Social Security check. I know too many people in their 70's and 80's who did that and now they are scrambling trying to survive by taking out reverse mortgages. Imagine you are receiving $1500 a month from SS and your taxes go up or you can't find a rental in your price range. Social Security might have been fine for people years ago but incomes have definitely not kept up with inflation.
I found that the biggest jump in SS predicted benefit is in the 50-60s when reaching the highest earnings level, currently at 64 my highest ever which is almost double what I made at 50. If I work to 70, which I may do, it will be 8% more than if I go at full retirement age 66. That's only a few hundred a month more, but I still enjoy my work.
Bravo!
That right there is everything. Enjoying your work! Congrats, not many can say that. Not enjoying life can put you in and early grave.
Perhaps I'm not understanding what you wrote because a person who made $100,000+ a year for most of their lives is going to get a large Social Security check than a person who made minimum wage their whole life.
Up to a point. Your benefits are calculated based on the top 35 years of income, whenever they happened; years in which you earned lower amounts than the top 35 are not included. The ceiling for calculating what you'll get is $110,000; making any more than that will not increase the amount you'll get. If you retire earlier than your full retirement age, your benefits are reduced; if you retire after your full retirement age, they increase by 8% for every year you delay past full retirement (delayed retirement credits).
The amount you'll get is calculated with a formula called the "primary insurance amount" which gives a higher percentage of replacement income for lower income earners than for higher income earners so there is an offset included that favors those who were lower earners.
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