Social Security benefits are estimated based on the number of years you have worked over the life of your employment. The Social Security Administration will determine first whether you have enough credits to qualify for the benefit. Most individuals needs 40 credits to qualify for benefits. It usually takes about 10 years of work to gain the 40 credits. Four credits are earned each year. Currently, for 2014, one credit is earned for every $1200 of wages earned or self-employment.
If you are qualifying for benefits based on disability, younger people need far fewer credits to qualify. Individuals’ average earnings are used over their work lifetime to estimate the benefit. The SSA also assumes that an individual will continue to work and will earn about the same salary or somewhere in that ball park as they get closer to retirement age.
Estimates are much more feasible as one gets closer and closer to retirement age because there are fewer fluctuations in the circumstances surrounding the individual. Most of us are not going to get any huge increases in salary as we get closer to retirement and more than likely will not change the nature of our employment. Further, the laws governing employment practices and earnings will probably not change as you get older and closer to retirement.
If there are changes in the law the period of coverage would probably not impact someone very close to retirement age. You can also use the Social Security Administration’s Retirement Estimator to get personalized benefits information. Actual benefits information can only be given when an individual applies for benefits. The actual benefits amount might differ from previous estimates. If there is a noted difference between what you were given as an estimate and what you will actually receive, don’t be too concerned. Always ask questions if you feel the need or you are uncomfortable with what you have been given. The actual calculation is generally always different from estimates given.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
