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How Much an Average American Will Collect in Social Security This Year

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How Much an Average American Will Collect in Social Security This Year

You will be surprised by the amount that is paid in Social Security each month.

It is likely that you will collect considerably less in Social Security than you may think. According to a national survey conducted in 2017, almost one out of four retirees claims they are receiving less in Social Security than they were expecting.

Although everyone will get a different amount in Social Security payment, it is better to know what an average American retiree is receiving in benefits. This will keep you from making some common mistakes most people make.

Common Mistakes in Collecting Social Security

Overestimating the amount that you will collect in Social Security income is pretty common as a survey indicates that fewer than ten percent of Americans know how their Social Security benefits are calculated. While Social Security aims to replace about forty percent of the pre-retirement income of an average retiree, the way your benefits are calculated means you may receive much less or more than that.

Social Security calculates the amount you collect by adjusting the highest 35 years of your income into current dollars for determining average monthly payments. Then your primary insurance amount is calculated, or the retirement benefits at full retirement age. This is done by applying multipliers which only offer you credit for a specific proportion of the average monthly income at various thresholds.

For instance, if you retire in 2018, you would get credit for just 90% of your income or a maximum of $895 a month, 15% of income above $5,397 and 32% of income between $895 and $5,397. This implies that if you have a high monthly income, you will replace a much lower percentage of your income compared to someone who has a low monthly income. This is why so many folks misjudge the size of their Social Security check.

Related: 18 Amazing Things The U.S. Government Spends Money On! 

How Much You Will Receive In Social Security Now?

In 2018, an average retiree will collect $1,404 a month; however, the actual amount you collect on retirement will depend on when you began receiving benefits and your work history. You are only eligible for 100% of the Social Security benefit when you reach your full retirement age that can vary depending on your birth year.

In 2018, 66 years and four months is the full retirement age; but, it would increase every year by two months until it approaches 67 years for individuals born in or after 1960. Also, remember that if you claim your benefits before you reach full retirement age, you will get less than the amount you qualify for at your full retirement age. On the other hand, if you claim your benefits after you reach full retirement age, you will get more than the amount you qualify for at your full retirement age.

For instance, you could claim benefits when you are just 62 years old; however, as Social Security will lower your benefits by a specific percentage for each month you claim prematurely, if your full retirement age is 67 years, you will just receive about 70% of benefits you would otherwise get at the age of 67 years.

In contrast, if you claim your benefits beyond your full retirement age, you will avail delayed retirement credits for each month that you delay. These credits will raise your monthly benefits by about 8% a year; therefore, if you claim at the age of 70 while your full retirement age is 67 years, you will get 124% of your full retirement age sum.

Related: Who Are the Richest Politicians in the US in 2018?

Other Things You Should Know About Social Security

If you wait till you are 70 years old to collect your Social Security, you will receive the highest Social Security amount. However, that does not necessarily imply that delaying is the best decision or that you can wait as long as you please. Retiring earlier than planned due to job loss or deteriorating health could spell disaster if you have not planned ahead for this risk.

So, make sure that you carefully plan your retirement savings depending on the lowest benefit amount you could collect in retirement.

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