How Much Will Social Security Contribute to Your Retirement?

November 28, 2018

Trying to plan your retirement income? Social Security will likely play a large role. It’s been a valuable resource for retirees for almost 80 years. Nearly 90 percent of all Americans age 65 and older receive Social Security benefits. That’s almost 46 million retirees and their dependents.1

How much should you plan on receiving from Social Security? The Urban Institute estimates that the average baby boomer will take in a total of $500,000 in benefits over the course of his or her retirement. The average millennial retiring in 2050 is projected to receive $1 million in retirement benefits.2

Those are general estimates, though, and not specific to your retirement. The Social Security website has a tool you can use to project your benefits as of today. Below is information on how Social Security generates your benefit amount:

Earnings History

Social Security is funded through payroll taxes. The higher your earnings, the more you pay, up to a maximum. Generally, the more you earn in your career and pay in Social Security, the higher your retirement benefit amount. As long as you have at least 40 quarters of work history, you qualify for Social Security retirement benefits.3

Your benefit is based on an average of your highest 35 years of income. If you have more than 35 years of work history, Social Security will drop your lowest-earning years in the average calculation. If you have fewer than 35 years of history, Social Security will count any missing years as zero earnings.3

Filing Age

The age at which you file can also greatly impact your benefit amount. You get your full retirement benefit if you file at your full retirement age (FRA), which usually falls between your 66th and 67th birthday.4

You don’t have to file at your FRA, though. You can file as early as age 62. However, an early filing can reduce your benefit amount. The earlier you file, the greater the reduction. For example, if your FRA is 67 and you file at age 62, your benefit will be reduced nearly 30 percent. If your FRA is 67 and you file at age 66, the reduction is only 6.7 percent. Keep in mind that these reductions are permanent.4

You can also wait past your FRA to file for benefits. Social Security offers an 8 percent annual increase in benefits for every year past your FRA that you wait to file. The latest you can wait to file is age 70. If your FRA is 66 and you wait until age 70 to file, your benefit will increase by a cumulative 32 percent.4

Not sure how Social Security will fit into your retirement income puzzle? Let’s talk about it. Contact us today at Grand Canyon Planning Associates. We can help you analyze your benefits and develop a projection. Let’s connect soon and start the conversation.


Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18149 – 2018/10/17