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Ready for Retirement? This Tool Will Estimate Your Monthly Social Security
How much do you really know about your Social Security benefits? If you’re like most people hoping to retire anytime soon, you probably know very little.
According to the Consumer Finance Protection Bureau, 30% of 60-year-olds can’t guess how much they will receive in Social Security benefits when they’re eligible in two years. And about 82% of people nearing retirement age don’t know that the age they begin claiming their Social Security benefits forever determines how much money they get each month.
This is a huge deal for those nearing retirement, because for many, their Social Security benefits will soon make up the majority of their monthly income.
The time to learn is now. That’s why the CFPB created a tool to teach us all about our benefits, whether retirement is right around the corner or still feels like a lifetime away.
How the Calculator Works
Head over to the CFPB website to give the calculator a try.
Remember, the calculator gives you a rough estimate based on current Social Security Administration regulations. So your actual Social Security payout may vary a bit.
To begin, you’ll enter your date of birth and your highest annual income.
From here, you’ll see a graph that shows you about how much you can expect every month during retirement. There is also a sliding scale that shows how the age you start collecting benefits, which ranges from 62 to 70, will affect your benefits.
I dropped in my information to try it out. Assuming nothing changes with how the Social Security Administration awards benefits in the next 34 years, I can expect about $1,200 per month if I claim my benefits at 62.
But if I can hold off until I turn 67, the calculator says my monthly benefits will jump 30% to $1,766. (Obviously, assuming nothing will change in my Social Security benefits by the time I’m 62 might be a mistake, but for those closer to retirement, the tool will be far more accurate.)
From here, you have the option of entering more specific information, including marital status, when you plan to retire and if you will earn additional income in retirement, to see how it will impact your benefits.
The purpose of the tool is to help with the critical financial planning we will all need to do to prepare for retirement.
Your Turn: Did you try the tool? Were your estimated Social Security benefits more or less than you expected?
Desiree Stennett (@desi_stennett) is a staff writer at The Penny Hoarder.