Why Is My Social Security So Low?
The average monthly Social Security payment is about $2,071, but the amount you personally receive could be much higher or much lower.
Some retirees receive over $4,500 per month, while others receive much less.
Your benefit amount depends largely on how much you paid into the Social Security system during your working years through payroll taxes (FICA).
Why Is My Social Security So Low?
The average monthly Social Security payment is about $2,071, but the amount you personally receive could be much higher or much lower.
Some retirees receive over $4,500 per month, while others receive much less.
Your benefit amount depends largely on how much you paid into the Social Security system during your working years through payroll taxes (FICA).
How Social Security Calculates Your Benefits
Social Security determines your benefit amount based on your 35 highest years of earnings.
Those earnings are adjusted for inflation and used to calculate your average indexed monthly earnings, which determines your final benefit amount.
Several factors affect how much you will receive, including:
- How many years you worked
- How much you earned during those years
- The age at which you start taking benefits
For example, someone who worked only 10 years may qualify for benefits, but the monthly amount will likely be much lower than someone who worked 35 years or more.
Years With No Income Can Lower Your Benefit
Because Social Security uses your highest 35 years of earnings, years with little or no income can reduce your benefit amount.
If you worked fewer than 35 years, Social Security may include years with $0 income in the calculation, which lowers the average.
This is one reason some retirees see smaller monthly benefits than expected.
How to Estimate Your Social Security Benefits
The easiest way to estimate your future Social Security benefit is to create a free account with the Social Security Administration.
You can do this at:
Your account will allow you to:
- View your complete earnings history
- Check for errors in your reported income
- See estimated benefits at different retirement ages
If you notice years showing $0 income when you know you worked, you may need to contact Social Security and provide tax returns or documentation to correct your record.
Keep in mind that the benefit shown in your account is only an estimate.
The estimate assumes:
- You continue working until your Full Retirement Age
- Your income remains similar to what you earn today
If you retire earlier or earn less in future years, your actual benefit may be lower.
Starting Benefits Early Can Reduce Your Payment
You can begin collecting Social Security retirement benefits as early as age 62.
However, starting early comes with a permanent reduction in your monthly benefit.
In addition, retiring early means you may have fewer high-earning years included in your 35-year calculation, which can reduce your benefit even further.
Spousal Benefits Can Affect Your Strategy
For married couples, Social Security decisions can be more complicated.
In some cases, a spouse may receive a higher benefit by drawing a spousal benefit rather than their own work record.
For example, some people begin collecting their own benefit early and later switch to a spousal benefit when their spouse retires.
However, there is an important rule to remember:
If you start benefits early, the permanent reduction may still apply, even if you later switch to a spousal benefit.
Because of this, Social Security timing decisions should be considered carefully.
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Is There a Perfect Time to Start Social Security?
The truth is that deciding when to start Social Security is partly a personal decision and partly a financial one.
Some people prefer to start benefits earlier to enjoy the income sooner.
Others choose to wait in order to receive larger monthly payments later in retirement.
Factors that may influence your decision include:
- Your health and life expectancy
- Your retirement savings
- Whether you plan to continue working
- Your spouse’s Social Security benefits
- Other sources of retirement income
Because no one knows exactly how long they will live, choosing when to start Social Security is often a balance between current income and future benefits.
Summary
Your Social Security benefit is based on how long you worked, how much you earned, and when you choose to begin taking benefits.
If your benefit seems lower than expected, it may be due to fewer working years, lower earnings, or starting benefits early.
Reviewing your earnings history and understanding how Social Security calculates benefits can help you make better decisions about your retirement income.