If you’re looking for an online Social Security calculator, you’ll find plenty of options. For example, the Social Security website has 11 different options for calculating your benefit! Additionally, there are plenty of private companies who’ll gladly take your money for their version of a SS calculator. Most of us don’t need all of those options. In most cases, there’s only one Social Security calculator you need to figure out your benefit.
The “online calculator” at the SSA website allows you to estimate multiple types of benefits based on your historical and future earnings.
You can estimate:
- Retirement benefits
- Disability benefits
- Survivor’s benefits
- Children’s benefits
- Child in care benefits
- Family maximum benefit
That’s a comprehensive list of benefits you can calculate but the most exciting for me is…the ability to enter future earnings. This is because the tool most commonly used to estimate Social Security benefits, the annual statement, is often just plain wrong due to how they assume your earnings will change.
If you want a refresher on how benefits are calculated, check out my step-by-step video titled How To Calculate Social Security Benefits in 4 Easy Steps
The calculation of your future benefit assumes that all future earnings (to age 62) will be the same as your earnings in the latest full year. The SSA website gives the following example: “…if the worker earned $40,000 last year, it is assumed he or she nominally earns $40,000 in the current year and will continue to nominally earn $40,000 in all future years until the relevant retirement age. If last year’s earnings were zero, then earnings from 2 years ago are assumed to equal the individual’s earnings from the current year until retirement. Zero earnings in the last 2 years result in the assumption of no current and future earnings.”
Obviously, this makes no allowances for calculating the effect of changing incomes. What if you decide to stop working or go part-time before age 62? What if your earnings increase in your last few years of working? How will these affect your benefit estimate? That’s why I love this calculator and think you’ll love it too! Let’s jump in!
NOTE: This calculator should not be used by individuals with a pension from work where no Social Security taxes were paid. Instead, they should use the WEP Calculator which is very similar.
STEP 1) Get Your Earnings History
If you don’t have a recent Social Security statement handy, here’s a quick guide to accessing yours on the SSA website. Checking Your Social Security Earnings Record
STEP 2) Go to the Calculator
STEP 3) Enter Information
This calculator does not require you to enter several pages of data to get your calculation results. The only thing you need is your date of birth, proposed age at retirement and earnings information (historical and future). We’ll go through each step to make sure it makes sense.
The “Date of birth” section is self explanatory. However, the “age at retirement” is important. This should be the age at which you plan to file for Social Security benefits which is not necessarily the age “at which you plan to stop working.” The SSA loves to make the assumption that you will file for benefits at the same time you stop working. For an individual with a well thought out retirement plan, that is not always the case.
When selecting the inflation option, I would strongly suggest using the “today’s dollars” option. If you use the “future (inflated) dollars” option, it will assume your benefit will increase by 2.6% per year from now until you file for benefits (according to the SSA WEBSITE). That’s simply too high! Instead, I would use “today’s dollars” and then apply an inflation rate of 1.5% using a calculator like you can find at Bankrate.com. The linked calculator is actually a compound interest calculator but it will do the trick nicely. Just leave out any annual contributions and it will tell you exactly what you need to know.
Now just put in your historical annual earnings information from your Social Security statement.
For current and future earnings you’ll have to use your best estimates. The SSA usually will not update current year earnings until the middle of the following year (or later).
The one downside to this calculator is that it doesn’t allow you to input variable earnings for future years. If you want to do that, you’ll need to download the Detailed Calculator. Fair warning though, it is nowhere near as easy to use as these online calculators. You’ll have to refer to the help section to understand the steps.
STEP 4) Calculate
Woo hoo! That glorious moment has arrived. It’s time to hit the ‘Calculate Benefit’ button and check your results.
STEP 5) Interpret Results
Now that you’ve calculated the results, you’ll see two main sections. The first section will list your eligibility for the various benefits and the second section will list the projection of the dollar value of your benefits.
The “benefit eligibility” shouldn’t cause any confusion. It will say either “Insured” or “Not Insured” in each of the different benefit boxes. What yours will say is dependent on your work history and whether or not you’ve earned enough Social Security credits in each of the benefit types. Interestingly enough, all three of these benefit types have different entitlement requirements. For more information, read my article titled The 4 Types of Social Security Credits.
Under the benefits estimates section you’ll see a few different benefit amounts listed.
Monthly retirement benefit: This is simply the amount of benefit you’ll be entitled to at the age you indicated in the “age at retirement” section.
Monthly disability benefit: This should be really close to your full retirement age benefit amount and is the amount you should receive if you become disabled before you retire.
Your surviving child: If you die, your surviving child(ren) are eligible for a benefit of up to 75% of your full retirement age benefit.
Your surviving spouse caring for your child: If you die and have children of a certain age at home, your spouse is entitled to a benefit equal to 100% of your full retirement age benefit. This is known as the child-in-care benefit.
Your surviving spouse at full retirement age: Your surviving spouse will be eligible for 100% of your full retirement age benefit at his/her full retirement age. However, they can file as early as age 60 and receive reduced benefits.
Maximum of total family benefits: In no case will the total amount of benefits paid exceed 180% of your full retirement age benefit. In fact, the range is 150-180% depending on your retirement benefit.
There are multiple rules and other things to know about benefits for children and spouses. For example, there are benefits available to your children and spouse if you become disabled. I’ve written an article which covers this titled Why Social Security is Important for YOU (even if you’re not close to retirement). It has charts that will show you have to calculate the family benefit maximum and other useful tools.
This is also a topic that we covered recently on our podcast Big Picture Retirement. You can play that episode below.