Want to get a head start on your retirement planning? You can estimate your Social Security benefits well in advance, which is a great way to map out your financial future. By understanding what you’ll likely get from Social Security, you can tweak other parts of your plan, like savings or investments, to make sure everything fits together perfectly. Here’s how to do it!
Social Security is a type of insurance program for later in life. While employed, you pay into Social Security, typically through payroll withholding. If you’re self-employed, you pay Social Security taxes when you file your federal tax return.
How your benefits are determined:
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- Social Security uses your earnings and work history to determine your eligibility for retirement or disability benefits or your family’s eligibility for survivor benefits.
- You must earn a certain number of credits to be eligible for Social Security benefits.
- The number of credits you need depends on the age at which you apply and the type of benefit you are applying for.
- For 2025, you will receive one credit for each $1,810 of earnings, up to a maximum of four credits per year. You must earn $7,240 to get four full credits.
- For 2026, you'll earn one credit for each $1,890 in earnings (up $80 from 2025), up to a maximum of four credits per year. You'll need $7,560 in total earnings to max out those four credits (up $320 from 2025).
- These figures apply to wages and income earned from self-employment subject to Social Security taxes. As always, you need 40 credits lifetime to qualify for retirement benefits.
How do you estimate your social security benefits?
Estimating your Social Security benefit is no easy task. In fact, it can be downright confusing. So, why is it important to know how to? After all, doesn't the Social Security Administration do all that work for you? While it's true that the SSA provides estimates for you, it can’t hurt to understand what goes into calculating your benefit amount so you know you’re receiving the correct benefit you deserve for all your hard work.
One way to estimate your Social Security benefits is to download (Form SSA-7004) from the SSA's website, which has an estimate of your benefit at age 62, at full retirement age (FRA), and age 70, based on your current work history. Unfortunately, because of its methodology, the Social Security benefits estimate is not always the most accurate account of what you can expect in the future.
Because Social Security is a big part of your retirement plan, it's important to know how much you're going to be getting and to incorporate that amount into other financial planning decisions. Follow these six steps to get a more complete estimate of your Social Security benefits.
1. Verify your wages
Rules stipulate that you must be at least 62 years old and have paid into Social Security for ten years or more to qualify for benefits. But you will receive higher monthly benefits if you wait to begin to collect your benefits at your FRA or at age 70. The benefit amount you receive is based on your average indexed monthly earnings (AIME) during your 35 highest-earning years as a worker.
Social Security keeps track of how much money you've earned each year you've worked in your earnings record. Your actual income and the income you’ve paid Social Security taxes on are usually the same. In 2025, you only pay Social Security taxes on the first $176,100 you earn. In 2026, that threshold rises to $184,500.
2. Adjust your wages for inflation
Social Security uses the Average Wage Index (AWI) to adjust your wages for inflation, ensuring that only those years where you earn the most are used to calculate your benefit. The AWI you use is the one that was in effect when you turned 60.
Unless you’re retiring this year, your future Social Security payouts will account for inflation in the years between now and your retirement age. Social Security uses national average wage indexing to calculate your benefits, adjusting your earnings to account for inflation in the years before your retirement.
To keep things a little less confusing, the Social Security Administration keeps a list of all the indexing factors. Just input the year you turn 60, and the calculator will identify for you which index factors to use.
3. Calculate your AIME
To calculate your Average Indexed Monthly Earnings, or AIME, add up your wages from your 35 highest-earning years. If you haven’t worked for at least 35 years, just add up your total income for the years you have worked so far. Keep in mind that a 0 will be used for years you didn’t work and included in the calculations, reducing your overall payout.
Divide this total by 420 (how many months are in 35 years). This amount will be rounded down to the nearest lower dollar amount and give you the correct figure to be used for your AIME.
4. Determine your PIA
To estimate your actual Social Security retirement amount, you’ll need to factor in “bend points.” These points are based on three separate percentages of your average indexed monthly earnings, as set by law.
For 2025, your PIA will be the total of:
- 90% of the first $1,226 of your AIME
- plus 32% of any amount over $1,226 up to $7,391
- plus 15% of any amount over $7,391
- For eligibility in 2026, these bend points rise slightly to:
- 90% of the first $1,286 of your AIME
- plus 32% of any amount over $1,286 up to $7,749
- plus 15% of any amount over $7,749
The sum of these three figures is your PIA and is rounded to the next lower multiple of $0.10 if it is not already a multiple of $0.10 (a dime), or essentially the next whole dollar. So, if the sum is $1,226.33, it rounds down to $1,226.30. If it's $7,391.88, it rounds down to $7,391.80.
5. Confirm your FRA
To get the largest monthly benefit available, it's best to wait until you reach your full retirement age, or FRA. If you can get by with a reduced amount, you can choose to start claiming your benefits early. However, as Social Security is a big part of most people's overall retirement plan, it's best to wait as long as possible before claiming benefits.
If you continue to work after you reach full retirement age or until you're closer to age 70 to retire, you might be eligible for delayed retirement credits, which would bring in additional monthly income.
Based on your birth year, your FRA is as follows:
Birth Year | Full Retirement Age (FRA) |
1943 to 1954 | 66 |
1955 | 66 + 2 months |
1956 | 66 + 4 months |
1957 | 66 + 6 months |
1958 | 66 + 8 months |
1959 | 66 + 10 months |
1960 and later | 67 |
Additionally, proposals are being discussed to potentially raise the FRA to 69 in the future.
If you choose to claim your Social Security benefits early or before your full retirement age, your checks will be reduced by:
- 5/9 of 1% per month up to 36 months
- 5/12 of 1% for each additional month if you claim more than 36 months early
6. Deduct your Medicare Part B premiums
If you are a senior, you will have your Medicare Part B premiums deducted from your Social Security check automatically. In 2025, the amount deducted is $185. That rises to $202.90 per month (up $17.90) in 2026. But if you're not yet on Medicare, don’t worry about deductions as they don't kick in until you sign up.
Key points
- To qualify for Social Security, you need to work for at least ten years.
- At retirement, your benefit is based on your 35 highest earning years.
- Your benefits may be increased or reduced depending on when you start taking them.
- You can collect 100% of your benefits at your full retirement age (FRA) which is determined by the year you were born.
Social Security calculator
Of course, you can always log into your Social Security page and calculate your benefits using the Social Security calculator. While that may be easier, understanding the steps to take to estimate your benefit can help you squeeze as much money as possible out of the program and also ensure you’re getting the benefit you deserve.
The need for Social Security
Social Security continues to be the core of the U.S. retirement system. Although it was never meant to be your main source of income in retirement, it does come in handy as supplemental income. As a beneficiary, you'll receive a monthly check for the rest of your life, no matter how long you live or what happens with the economy.
That said, Social Security is projected to become insolvent in 2033, which would lead to a forced reduction in benefits unless the government steps up and addresses the issue.
Just keep in mind that Social Security recalculates your benefit annually, adjusting for inflation and figuring in your previous year’s income. If your last year's income is in your top 35 years of earnings, Social Security will delete a lower-earning year, which means your average monthly earnings will increase. If you worked fewer than 35 years, any years without earnings will be counted by Social Security as zero in your benefit calculation.
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