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We'll start with the sound-bite answer first -- and dig down a bit later. If you earn $75,000 per year, you can expect to receive $2,358 per month -- or about $28,300 annually -- from Social Security. While that alone might not be enough to continue living your current lifestyle, it will no doubt be a major contributor to your retirement income.
But there are a host of variables that can change this. To understand how they all interact, let's investigate the two biggest factors at play.
Lifetime earnings
For starters, if you are taking in $75,000 per year, you're doing pretty well compared to the average American. Last year, the median household income -- which includes all members of a family -- in America was $56,516.
But the amount you're earning right now isn't all that matters when it comes to Social Security. That's because your full benefit is computed by taking the inflation-adjusted average of your 35 highest-earning years on record.
It might sound daunting to go back and calculate all of that right now, but the Social Security Administration has a handy calculator that does the heavy lifting for you right here.
Once you figure out your average earnings from those 35 years, the calculation of your annual benefits is pretty simple.
- You will receive 90% of the first $10,620on your average earnings (maximum of $9,558 annually).
- You will receive 32% for every dollar between $10,620 and $64,032 (maximum of $17,092 annually).
- You will receive 15% for every average dollar over $64,032 (maximum of $5,594 annually).
While your salary in the years to come is hard to predict, I usually like to assume that it'll decrease slightly every year until I retire, to build in a margin of safety for planning purposes.
When you retire matters
For those born before 1955, full retirement age clocks in at 66. But for those born after that date, full retirement age ranges between 66 and 67 years old.
But the important thing to note is that anyone can claim their Social Security benefits between age 62 and age 70. There is, of course, a trade-off: those who claim their benefits earlier have reduced payouts, while those who claim later can actually get more than their "full benefits."
To put this in perspective, let's assume that the person in question has earned an average of $75,000 and was born before 1955. Here's the annual payout that this individual can expect from Social Security, depending on their year of retirement.
Data source: IRS, author's calculations. All figures rounded to the nearest $10.
It should be noted that the Social Security Administration usually discusses such figures in terms of monthly benefits. I chose to do this in terms of annual benefits, because it is typically the way we think about the amount of money we need to maintain a certain lifestyle.
When should you claim?
There's no one-size-fits-all answer to this question. There are a million variables to consider, including the type of lifestyle you have, how much you enjoy your current job, your relative health, and what you want to do in retirement...to name just a few.
I've long been a proponent of taking Social Security as soon as possible, as long as all of your basic needs will be met. Study after study has shown that people enjoy record levels of happiness, contentment, relaxation -- and record-low levels of anxiety -- once they enter retirement. The freedom over time and what you are focusing on is far more beneficial than many expect it will be.
For that reason, I think it's wise to claim as soon as possible -- even if you like what you're doing. It offers you flexibility, and that flexibility can go a long way in helping you to enjoy the retirement you've earned.
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FAQs
If you earn $75,000 per year, you can expect to receive $2,358 per month -- or about $28,300 annually -- from Social Security. While that alone might not be enough to continue living your current lifestyle, it will no doubt be a major contributor to your retirement income.
How much will I get in Social Security if I make 75k a year? ›
If you start collecting your benefits at age 65 you could receive approximately $33,773 per year or $2,814 per month. This is 44.7% of your final year's income of $75,629. This is only an estimate. Actual benefits depend on work history and the complete compensation rules used by Social Security.
How much Social Security if I make $80,000 a year? ›
Here's the starting benefit for each of those same final annual incomes, if you wait until age 70: Final pay of $80,000: benefit of $2,433 monthly, $29,196 yearly.
How much Social Security will I get if I make $30,000 a year? ›
The general rule is that Social Security benefits replace about 40% of pre-retirement income. With $30,000 in annual income, that means you could receive an estimated $12,000 per year in Social Security payments, without adjusting for inflation.
How much Social Security if I make $50,000 a year? ›
A single person born in 1968 who has averaged a $50,000 salary, for example, would get $1,410 a month by retiring at 62, the earliest age to start collecting. The same person would get $2,014 a month by waiting until the full retirement age of 67.
Is $1500 a month enough to retire on? ›
While $1,500 might not be enough for non-housing retirement expenses for many people, it doesn't mean it's impossible to stick to this or other amounts, such as if you're already retired and don't have the ability to increase your budget.
How much is your check if you make 75k a year? ›
If you make $75,000 a year living in the region of California, USA, you will be taxed $19,714. That means that your net pay will be $55,286 per year, or $4,607 per month.
How much Social Security will I get at 62 if I make $40,000 a year? ›
Social Security was never meant to replace all of your work income, but it replaced a decent chunk for those who earned $40,000 consistently during their careers. The $1,580 figure is almost half the $3,333 in career monthly pay, and that doesn't include the income taxes that you had to pay on your work income.
How much Social Security will I get if I make $100,000 a year? ›
If your highest 35 years of indexed earnings averaged out to $100,000, your AIME would be roughly $8,333. If you add all three of these numbers together, you would arrive at a PIA of $2,893.11, which equates to about $34,717.32 of Social Security benefits per year at full retirement age.
At what age do you get 100% of your Social Security? ›
The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. The chart on the next page lists the full retirement age by year of birth.
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
How much Social Security will I get making $20000 a year? ›
If you earned $20,000 for half a career, then your average monthly earnings will be $833. In this case, your Social Security payment will be a full 90% of that amount, or almost $750 per month, if you retire at full retirement age.
How much Social Security will I get if I make $120000 a year? ›
The point is that if you earned $120,000 per year for the past 35 years, thanks to the annual maximum taxable wage limits, the maximum Social Security benefit you could get at full retirement age is $2,687.
How much can I afford if I make 75k a year? ›
Here's how the 28/36 rule works, assuming you make $6,250 per month ($75,000 per year) before taxes. If my “front-end” DTI ratio is 28%, what monthly payment can I afford? Your monthly mortgage payment, including taxes and insurance, shouldn't exceed $1,750.
How much money do you need to retire with $80,000 a year income? ›
For an income of $80,000, you would need a retirement nest egg of about $2 million ($80,000 /0.04). This strategy assumes a 5% return on investments, after taxes and inflation, no additional retirement income, such as Social Security, and a lifestyle similar to the one you would be living at the time you retire.
