Social Security is a basic social security benefit that is available to US residents who have worked legally and paid takes in the US for a certain period of time.
While retiring with only a pension, it is never enough as a retirement plan. It is unfortunate to know that 50% of people who retire have 50% of all retirement funds from social security pensions. Learn the basics to make the most of your social security pension.
What is the average social security pension amount?
The average monthly amount for a pensioner in 2022 is $1,657, or $19,884 a year. That’s $10 an hour if you work 40 hours a week. It is easy to see that retirement funds are not enough. For reference, the maximum amount you can receive as a pension is $4,194 in 2022 and $50,328 in one year. Only 0.4% of pensioners receive the maximum amount.
How do I get the minimum social security amount?
To be eligible for a pension, you must report income of a certain amount for at least 10 years and receive 4 credits each year, for a total of 40 credits. In 2022, you could earn 1 credit for every $1,510 of your income, so to get 4 credits, you must file at least $1,510 x 4 = $6,040 or more.
How much social pension can I get?
Social Security is calculated on the basis of gross income, adjusted for inflation, over the past 35 years. If you earn more than the Social Security Max amount each year for 35 years ($147,000 in 2022), you will receive the highest Social Security amount, and if you have earned 40 credits with the minimum income in 10 years, you will receive the lowest.
When will I receive my social security pension?
The estimated social pension calculated above is the amount when you receive the full retirement age (FRA) from 66 to 67 years old. If you receive it from the age of 62, you will receive a 30% reduction in the amount, and if you receive it after the age of 70, you will receive a social pension that increases by 8% each year for a total of 24% for the rest of your life.
Spouse’s Social Security
If one of the spouses is eligible for a pension, the spouse can also receive 50% of the spouse’s Social Benefits. In other words, if one of you receives $2,000 per month in benefits, your spouse is also eligible for 50% , $1,000 per month. If the spouse receiving the $2,000 pension dies, the surviving spouse (Widow or Widower Benefits) will receive $2,000, not $1,000.
Social Pension Cost-of-Living Adjustment(COLA)
The pension amount is adjusted each year in line with the inflation rate. 2022 will receive a 5.9% increase.
When will I receive my social pension?
It is of interest to all retirees preparing for retirement. Unfortunately, because of the cost of living after retirement, many people apply for a pension at age of 62. The number of people applying for a pension at the age of 62 is a whopping 50%. This means that many retirees will receive a cut of about 30% until they die. If we knew when we would go to heaven, it would be easy to decide when to apply for a pension, but life expectancy is definitely increasing. If the pension application is delayed until age 70, it will increase by 8% every year, and if inflation is included, the rate of return will be more than 10%. It is very difficult to get such a high return no matter where you invest.
Check Social Security Tax Income and Expected Social Security Amount
You can create a My Pension Account on the Social Security site (https://www.ssa.gov/) and check the accurate Earnings Record and estimated amount of social pension.
More importantly, someone can use my personal information to receive a pension without my knowledge. This is why you should create a pension account and take a care of it at least once a year.
Myung-Duk Lee, Ph.D., Registered Investment Adviser (RIA)
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