How To Calculate Social Security Benefits: 4 Easy Steps

Step-By-Step Video Guide

It’s important for you to understand how to calculate Social Security benefits. Sure, the Administration will perform this calculation for you, but if you understand the process used you may be able to spot errors and fix mistakes before it’s too late.

Here’s how to calculate your benefit amount in 4 easy steps.

Transcript of video is below:

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Social Security Credits

How Many Will You Need?

Social Security Credits

Social Security credits are the building blocks that the Social Security Administration relies on to determine whether or not you qualify for one of its programs.  In 2016, you receive one credit for each $1,260 of earnings, up to the maximum of four credits per year. The amount of earnings needed to earn a credit increases annually as average wage levels increase.

One stipulation is that your earnings must be subject to Social Security tax to count for a credit.  In exchange for this tax, you are eligible for the following important benefits:

  • Social Security Retirement Benefits
  • Social Security Disability Benefits
  • Social Security Survivor Benefits
  • Medicare

Each of these programs have different requirements for the number of credits to gain eligibility.  Here’s a quick look at the eligibility for each. 

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Mailbag: Trigger for The Government Pension Offset

answers to social security questions

This reader had a question about avoiding the Government Pension Offset for as long as possible.


Enjoyed your informative article (“Your Social Security and Retirement Benefits”) in the latest issue of ATPE News magazine.

I am an ex-serviceman (24-year career, US Army), currently a teacher, and will not be affected by the WEP when I retire and begin collecting my TRS pension.

I do have a question about the GPO:  Can a spouse who is paying into TRS, not retired, and at FRA (under Social Security rules) apply for a spousal support benefit (under SS) when her husband who is at FRA applies for SS benefits?


I like this kind of question. It makes me think!

What I’m pretty sure you’re asking is this: If you are not receiving your pension from non-covered work, does the Government Pension Offset apply?

The simple answer is…NO!

If you are still working and your spouse has filed for benefits, you can file for and receive a Social Security benefit that is not affected by the Government Pension Offset. Enjoy it while it last. Once you retire, your Social Security benefit will get reduced by 2/3 of the amount of your TRS pension.

A note for all readers.

Over the past few years, I’ve found that most Social Security questions can be answered with an understanding of just six  simple Social Security basics. I cover these basics in a 100% free report that you can download by clicking HERE.

If you still have questions after reading this report, send me an email.  I can’t promise that I’ll respond individually, but I love interacting with my readers and answering Social Security questions! The questions and answers that’ll have priority are those that may benefit a wider audience. I’ll answer the question individually and then publish the Q&A on my blog. (Don’t worry, I’ll change up enough personal details so you’ll stay unknown.)

If you want to make sure I answer your question, I am still accepting individual consultations. You can click HERE for more information on booking a call with me.

Thanks for reading!


Mailbag: Switching from Disability to Retirement Benefits

answers to social security questions

A reader has a question about the suitability of switching from Social Security disability benefits to Social Security retirement benefits.


Dear Mr.Carroll,

I was awarded Social Security disability prior to age 62. I and am now age 62 and am entitled to Social Security retirement benefits simultaneously with disability benefits.

Also, I have three minor children currently receiving auxiliary benefits on my DIB.

I am interested in applying for Social Security retirement benefits since it may yield me an overall larger family-benefit (even if my personal-benefit (reduced-RIB) will be smaller than DIB).

I specifically am interested in how my Social Security Retirement Primary Insurance Amount (PIA) may be calculated relatively (from how my Disability-PIA was previously calculated).

My Questions, please:

Will my RIBPIA be calculated, like my DIB-PIA was, using the:

  • “freeze” (excluded the 4-years of my disability prior to my disability onset date and used only 31 of the usual 35-yrs) or will it calculate my RIB-PIA using the usual 35-yrs?
  • the national average wage index (NAWI) factor previously used to calc my DIB (2-yrs prior to my disability onset date) or will it calculate my RIB-PIA using my new age-60 NAWI?

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Mailbag: The Social Security Family Maximum

answers to social security questions

Question on the application of the Social Security Family Maximum


Here’s my situation:
At 66 I filed and suspended my social security benefits.
I have a 15 year old daughter at home.

Currently, my wife is receiving a Social Security benefit for a “child in care” and my daughter is receiving a benefit as well. My understanding is that my daughter will continue to receive her benefit until she is 18 and my wife will receive her “child in care” benefit until my daughter is 16.

My question is, if I decide to take my benefits before I turn 70, do the “spousal child care” and “child under age 18” disappear?

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Mailbag: Non Typical Pension and The Windfall Elimination Provision

answers to social security questions

Question from a reader on what actually qualifies as a pension for purposes of applying the Windfall Elimination Provision.


Hi Devin,

I just listened to your interview on Radical Personal Finance. I was hoping for a more applied discussion, but Joshua couldn’t get off the politics! Ha. Oh, well. You’ll have to do another sometime.

I had a couple topics in mind where I have not found an answer to, and low and behold, you have a couple blog posts on it. Feel free to add these as addendums to the posts if that adds value/clarity to them.

You’re post entitled “What Illinois Teachers Need To Know About Social Security” hit home with me, as I am in the same situation as teachers in Illinois. I work for our University system here in Alaska, and we do not participate in SS taxes, aside from Medicare. Your explanation of WEP and GPO are the best I’ve seen, although the definition of what is and is not considered a “Pension” is one thing I have not found an answer to. My employer currently pays into 2 separate 401(a) accounts, one of which is actually called a “Pension“, but we manage and bear all investment risks in both accounts, so it’s not a guaranteed monthly income like a traditional pension. Am I correct in saying that the SS administration doesn’t care about the type of account, and that I’ll likely be subject to WEP when the time comes (assuming I meet the other conditions for WEP to become applicable to me)?

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Mailbag: Update on the Repeal of the Windfall Elimination Provision

answers to social security questions

Kathleen asked me about the current status on the repeal of the Windfall Elimination Provision.


Where do things stand legislatively now re Windfall Profit Elimination?

As someone who worked as a teacher for only 10 years–the rest of my employment having been primarily with non-profits–I’m suffering from the cuts to what would have been my  social security. To add insult to injury, California (at least) was not required to alert potential new teachers about the WEP effect until 2 months after I was employed, so I wasn’t informed about it until it was  close to my retirement.

I hope you can send me an update.

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Mailbag: A pastor asks, “Should I Opt Out of Social Security If I’m Already Entitled to Benefits?”

answers to social security questions

Question from a pastor on opting out of Social Security.


I am a full time pastor in NC & I read this article you wrote which prompted a question (

I worked in secular employment for about 20 years before becoming a pastor. I have always had some religious and ethical issues with the SS system but more so since I receive my entire salary from peoples tithes and offerings. So I have a question about should I opt out of Social Security…

Since I worked in non-church based jobs for 20 years and paid SS tax all those years would I still get a benefit from that portion of working life if I opt out of the system with regard to my church income?

Just wondering.

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What Illinois Teachers Need To Know About Social Security

Illinios teachers and Social Security

If you’re a teacher who has worked in Illinois, you have some special challenges when figuring out your potential Social Security benefits.  Whether you are a new teacher working on a long-term financial plan, or an experienced educator preparing for an imminent retirement, it is important that you understand how your teaching pension impacts your eligibility for Social Security benefits.

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Louisiana Social Security: What Louisiana State Public Employees Should Know

Louisiana teachers and social security

Louisiana state public employees face special challenges when it comes to figuring out their retirement benefits.  Most Louisiana state public employees, who may be covered by LASERS, LSERS, TRSL, or other public employee retirement plans, don’t pay into the Social Security system.  This means their ability to receive Social Security benefits is different from typical employment where the employee pays Social Security taxes.  The situation gets more confusing when an eligible employee has some Social Security covered employment and some non-Social Security covered employment.  Even worse, many people don’t learn about the rules until they reach retirement age, and they may have made decisions based on faulty information.

Thankfully, the rules aren’t too complicated, and I’m here to help you decipher them. 

There are two rules that apply here:  the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).  These links give more detailed information about each rule, but here are summaries:

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