How Much Does Social Security Pay? | Updated For [2022]

Social Security benefits come in many forms, and beneficiaries depend on these payments to meet their monthly financial obligations. Many rely solely on this income, while others rely in part on monthly payments from the Social Security Administration. When planning for retirement, it is essential that individuals be able to determine the amount of their monthly allowance. This helps retirees plan their budget and decide when to retire and start their benefits. So how much does Social Security pay, and how can you determine how much you’ll receive? Read on as we explain exactly how to calculate your Social Security benefits, as well as provide information on average payment amounts.

Average social allowances for 2022

As of January 2022, the average Social Security retirement benefit is $1,657 per month. This is a 6% increase over payments in 2021. This year we have seen a much higher cost of living adjustment than normal. This is due to the fact that the consumer price index has seen a spike in inflation and a rapid increase in the cost of goods and services. Each year, SSA makes an adjustment to payments based on the consumer price index. If the cost of the goods increases, the payments will increase accordingly. However, if the price index falls, the payment amounts will remain the same. You will not see a decrease in your monthly payment.

For Americans receiving Social Security disability benefits, the payments are not that high. The average SSDI payment in 2022 is $1,358. Again, this is higher than the 2021 amounts, but, on average, the SSDI benefit amount is always less than the pension benefit amount. Supplemental Security Income (SSI) benefits are the lowest of the three types of benefits. Average SSI payments in 2022 are around $600 per month. You can quickly see that this amount is not enough for most people to cover their living expenses. This is why SSI recipients automatically qualify for other types of assistance in most cases. These other assistance programs may include food stamps, housing assistance, Medicaid, or other programs.

Calculating Your Social Security Benefits

So how is social security calculated? Although the calculation to determine the amount of the benefit is somewhat complex, it is not impossible to calculate the social security benefits yourself. This is what you should do.

#1. Calculate your AIME

First, you’ll need to calculate your average indexed monthly earnings, or AIME. You will need to access your full earnings history. Your benefit payments are based on your lifetime average salary, so go ahead and collect this information. You can find it on your previous tax returns or your social security statement. Once you have access to your vital earnings, select the 35 highest amounts. If you haven’t worked for at least 35 years, you’ll need to use zero for the years you don’t have an amount.

Once you have these amounts, you must index them to the current year according to the tables provided by the Social Security Administration. This takes into account inflation and adjusts earnings from prior years to current dollars. For example, if you earned $50,000 in 2010, that amount could be indexed to $55,000 by 2022. A complete list of wage index values can be found on Once your annual amounts have been indexed, you need to add them up and divide by 420 to arrive at your monthly amount.

#two. Calculate your bend points

Once you have your AIME, you will need to determine the bend points. These fold points vary based on the amount of AIME, and a table of fold points can be found on the SSA website. Social security payments are derived from the amount of primary insurance. Split Points help you calculate your primary insurance amount by adding a percentage of your AIME within certain payment bands. In 2022 you will receive 90% of your first $1,024 of your AIME, 32% of your AIME between $1,024 and $6,172, and 15% of your AIME over $6,172. After doing this calculation, you will be left with the principal amount of insurance. Therefore, you will need to adapt accordingly.

# 3. Make the necessary changes in PIA

If you begin receiving your benefits at full retirement age, you generally do not need to make any changes. You will receive 100% of your PIA. However, if you start your benefits early, your retirement income will be reduced. Starting benefits at age 62 will result in a 25% reduction in your monthly Social Security benefit. However, you can earn late retirement credits if you wait to start your benefits later. If you wait beyond full retirement age, you can increase your monthly payments. These credits peak at age 70, so there’s really no reason to wait any longer to apply for Social Security.

Benefit Estimator for My Social Security Account

If running all those calculations to determine your Social Security income seems too complex, relax! There is a much easier way for future Social Security beneficiaries to get an estimate of their benefits. The Social Security Administration provides a free Social Security Estimator on its website. The first thing you need to do is create a My Social Security account at . This account will allow you to access your Social Security statement, earnings history, and benefit estimator.

This calculator makes it extremely easy to estimate your benefits based on different scenarios. You can select different retirement ages and see how this will affect your benefit payment. Also, you can make changes to future earnings. For example, you may receive a 5% raise each year, which will have a huge impact on your total earnings over your lifetime. The benefit estimation tool will allow you to make these changes to get a very accurate estimate of how much your monthly payments will be at retirement. This is an extremely useful retirement planning tool and you should consider using it when analyzing your personal finances to determine your retirement goals.

How to Maximize Social Security Payments

Social security is often an important source of income for retirees. For this reason, it is wise to plan to get as much money as possible from these benefits. So how can you maximize the amount of money you receive from Social Security? Here are some tips from Social Security to maximize your benefits.

– Maximize your earnings

One of the things that will have the biggest impact on your future benefits is maximizing your earnings during your working years. The more social security taxes you pay while you work, the more money you’ll receive once you retire. Remember that in 2022 the Social Security tax limit is $147,000. If you can maximize your earnings up to this amount, you can potentially receive the maximum Social Security benefit when you retire. The maximum benefit per month is $4,194 for someone retiring at age 70 in 2022. Also, remember to claim any money you earn in income taxes to increase your taxable income, especially if you’re self-employed. If you don’t pay taxes on the money you earn from working, it won’t be counted in your income for Social Security purposes after you retire.

– Work at least 35 years.

You may remember from school work that a zero has a negative effect on your GPA. The same applies to social security benefits. Since the benefit amount is calculated using the highest 35 years of earnings, working less than 35 years has a substantial negative impact on the social security allocation. Suppose we only work for 30 years. This means that your earnings will be considered zero for five years when calculating your benefit amount. Using a zero, especially when a zero has been used for several years, can greatly reduce the amount of benefits. If you’re physically able, you should do whatever it takes to work for the full 35 years to maximize your earnings and potentially get the maximum Social Security benefit when you retire.

– Delay the start of your benefits

If you can financially delay the start of your benefits, this can significantly affect the amount you receive. Waiting just a couple of years can push your monthly payment up to $800 in some cases. Remember that those payments will last a lifetime, so the amount can really add up. On the other hand, starting your perks too soon will have the opposite effect. Starting benefits a few years before retirement age can reduce benefits by up to 25%. Again, since these payments last for the rest of your life, you could lose a lot of money. In addition, the spouse could receive marital and inferior survivor benefits for the rest of his or her life. Although in some cases it is unavoidable, you should do your best to wait as long as possible for your benefits to begin. Since your late retirement credits will peak at age 70, you don’t need to wait past this age to start paying.

– Calculate your marital benefits well

Remember that your spouse is also entitled to benefits based on your earnings history. If you were the primary earner, make sure those marital benefits are sequenced correctly to receive the highest amount possible. This comes into play when the spouse is entitled to both spousal benefits and their own. If you were the primary earner, it generally makes more sense for your spouse to claim marital benefits as soon as they qualify. In this way, they can continue to accumulate their benefit. Upon reaching the age of 70, they can pass to their own benefit, which is therefore as high as possible. You may want to consider consulting with a financial planner to help you with the timing and sequencing of marital benefits to maximize the amount you can receive.

The bottom line

The average Social Security retiree can expect to receive approximately $1,600 per month in benefits. Remember that Medicare Part B premiums can be deducted from this amount if you choose to enroll in Part B health coverage. Disabled workers with Social Security Disability Insurance (SSDI) can expect an average payment of approximately $ 1,300 and SSI recipients receive about $600 per month. Don’t forget that your dependents may also be eligible for benefit payments based on your earnings history. This applies to both retired and disabled workers.

Frequent questions

How do you know how much you will receive from social security?

Many people ask, “How much Social Security will I get?” There are a couple of ways to find out how much your payments will be. First, you can calculate your benefit payments. This method is quite complex and cumbersome and you will need access to your lifetime earnings history. The easiest way is to use the Social Security Performance Estimator tool in your My Social Security account. This calculator allows you to estimate your benefits based on future earnings and retirement age. This tool makes it extremely easy to estimate profits based on different scenarios.

How much does Social Security pay people with disabilities?

The average SSDI payment in 2022 is about $1,300 per month. These payments are made by social security trust funds, just like retirement benefits. However, because most disabled workers have not paid as much Social Security taxes as retirees, benefits tend to be a bit lower.

How much will Social Security pay me at age 65?

For most people, full retirement age is 66 or 67. If you start receiving benefits at age 65, the benefit amount will be reduced. You can use the Social Security Administration’s online benefit estimate tool to determine the amount you will receive if you retire and begin receiving benefits at age 65. It is likely to be around 10% less than the full amount of the pension.