Retirement is a time when many people are looking forward to taking a break from their career and enjoying the fruits of their labor. However, in order to make the most of their retirement years, it is important to understand the benefits that are available from Social Security. Understanding how much Social Security you can expect to receive at age 63 is an important part of retirement planning.
Understanding Social Security Benefits
Social Security is a federal program that provides a monthly benefit to eligible individuals who have worked and paid into the system. The amount of the benefit is based on how much the individual has earned over their lifetime and how much they have paid into the system. Generally, the more an individual has earned, the higher the benefit they can expect to receive.
The Social Security Administration (SSA) determines a person’s benefit amount at age 63 based on their average indexed monthly earnings (AIME) over the course of their working life. This AIME is calculated by taking the total earnings over the course of a person’s working life and adjusting it for inflation. Once the AIME is calculated, the SSA applies a formula to determine the monthly benefit amount.
Maximizing Social Security Benefits at Age 63
Since the amount of the Social Security benefit is based on earnings over the course of a person’s working life, it is important to maximize earnings as much as possible. This means taking advantage of any opportunities to earn more money and investing in retirement savings plans such as an IRA or 401(k).
It is also important to consider when to begin taking Social Security. Generally speaking, the longer an individual waits to begin taking Social Security, the higher the benefit they will receive. For those who are eligible, beginning to receive benefits at age 63 can provide a significant financial boost during retirement.
Finally, it is important to keep in mind that Social Security benefits are subject to taxation. Depending on the individual’s income, up to 85% of their Social Security benefits may be subject to federal income tax.
Social Security is an important part of retirement planning and understanding how much you can expect to receive at age 63 is key to maximizing your retirement income. By taking advantage of opportunities to increase earnings and carefully considering when to begin taking Social Security, individuals can maximize their Social Security benefits and enjoy a secure retirement.
As age 63 approaches, many people begin to think more critically about their future retirement plans. First and foremost, they want to know how much social security they will receive once they reach retirement age.
The answer to this question varies on an individual basis. Social security is available to workers who have paid into the system, and the amount they receive is based on how much they have earned over the course of their working life. Specifically, the United States Social Security Administration (SSA) looks at an individual’s average indexed monthly earnings (AIME) to calculate the amount of social security they will receive.
The AIME is an average of a worker’s “high 35 years” of earnings. To calculate this number, the SSA adjusts each worker’s earnings from their highest-earning years by a cost-of-living index. Therefore, the AIME is impacted by the inflation of the country.
The SSA also considers other factors, including a worker’s marital status, the age at which they begin to access benefits and whether or not they have any dependents. For instance, each dependent the worker has at the time of retirement can increase the amount of social security they receive.
In general, the maximum amount of social security a worker can receive is based on the AIME. Specifically, the SSA pays a worker the equivalent of 90 percent of the first $880 earned, 32 percent of the earnings between $880 and $5,336, and 15 percent of any amount over $5,336. The resulting total is their AIME-based benefit.
In short, how much social security a person receives at age 63 depends on how much they have earned in the past. When combined with other individual factors, the SSA is able to make a more accurate calculation of the benefits each retiree will receive. As retirement approaches, it is important for people to consider these crucial elements when looking into their future social security for a better understanding of what to expect.
