Social Security Income Planning

Robert Ramos |

Social security benefits are the most important component of most American’s retirement income.  Despite this fact, most people do not understand how their Social Security Retirement Benefits are calculated. 

Your Social Security benefit is based on your average monthly income during your 35 highest-earning years, with adjustments for inflation. If you haven't worked for at least 35 years, the Social Security Administration (SSA) will add zeros to complete your 35 year record. Having less than 35 years of Social Security eligible income will reduce how much you're entitled to.
In order to qualify for Social Security benefits, you must have at least 40 quarters (10 years) of earned income. If you've worked less than 10 years, you might not be eligible for Social Security retirement benefits.

Deciding when to claim social security should not be taken lightly. Consider today’s longer life expectancies.  The Social Security Administration estimates that one in four 65-year-olds today will live past 90 and 1 in 10 will live past 95.

Early benefits are available at age 62.  Claiming your social security benefit at age 62 reduces your lifetime benefit by 30% for yourself and potentially your surviving spouse.  Your full social security benefit is available at 66 or 67 depending on your year of birth.  You can delay benefits until age 70. You can claim your benefits anytime between age 62 and age 70. Every year you delay allows your monthly benefit to continue to grow. If you are in good health or if you have other sources of income you can tap into, it pays to wait.

Estimating how much your total lifetime benefit will be based on different starting ages is a prudent place to begin your decision-making process. First, estimate your life expectancy based on your personal and family health history. When in doubt, it's best to figure on the high side.

Locate your monthly benefit estimates for ages 62, 66/67, and 70 from your Social Security Wage and Benefit Statement. Multiply each of these amounts by 12 to get your estimated annual benefits. Then multiply these numbers by the number of years you will draw your retirement benefits based on the starting age (62, 66/67, 70) and your estimated life expectancy. For example, if you expect to live to 87 and you're entitled to $1,000 per month at your full retirement age of 67, you'd multiply $1,000 by 12 to get an annual benefit of $12,000 and then multiply this by 20 years to get an estimated lifetime benefit of $240,000.

Social Security Wage and Benefit Statements are only mailed to workers age 60 and older.  To check your social security record, you can create a social security account at  This will give you access to your reported earnings and expected social security benefits.  It will also allow you to make hypothetical changes to income and benefit election dates to see how those changes could affect your benefits.  

It's important that you check the reported earnings recorded by social security each year to be sure it's accurate. If the SSA has the wrong information, it could underestimate your average monthly earnings, which means you'll get a smaller check than you deserve.  Incorrect information can be corrected if you catch it within the first few years.

Social Security may be the only guaranteed income you will have in retirement. It is important to plan how best to claim that benefit.  The personal financial planning professionals here at Wealth Management Partners, LLC possess the experience and expertise to help you make wise decisions about your Social Security Benefits.