"Social Security calculates your retirement benefits based on your 35 highest-paid years of earnings. During those years, you're paying into the system on your wages, up to a certain point. Higher earners may not pay Social Security tax on every dollar they earn because there's an income cap put in place each year. If you have a 20-year work history so far, it means your Social Security benefits have the potential to increase between now and retirement."
"So let's say you decide to create a Social Security account and get an estimate of your monthly benefits. You might see, for example, that you're eligible for $2,500 a month at full retirement age (FRA). But if you're only 45 and could conceivably work another 15 years, and at higher pay, until you're ready to claim Social Security, then there's a good chance that between now and then, your monthly benefits are going to increase."
Social Security retirement benefits use the 35 highest-paid years of earnings to calculate monthly payments, with earlier wages indexed for inflation. Contributions are tracked through SSA.gov accounts, and missing years count as zero in the calculation. An annual income cap can limit taxable earnings for high earners. Workers with 20 years on record can raise future benefits by working more years, especially at higher pay, and the SSA account estimate shows projected monthly benefits at full retirement age to illustrate potential changes from additional work.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]