Social Security Benefit Amount Qualifications
Understanding how much (or how little) Social Security benefits will pay you later in life is an essential tool for financial planning. While the average Social Security Retirement benefit for December 2010 was $1,175, your own benefit is unique to your work history and age of retirement. Aside from retirement, other Social Security benefits will also vary depending on your work history, income and resources---sometimes, even the state you live in will have an impact on how much you will receive.
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Basic Qualifications
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In order to qualify for Social Security at all, you must meet requirements specific to the type of Social Security you're applying for. Retirement requires that you are at least 62 years old and worked long enough (usually 10 years) while paying Social Security taxes. Disability Insurance requires that you have a long-term disability and cannot work, Supplementary Security Income (SSI) requires that your income falls under a certain threshold, and Medicare health insurance requires that you're at least 65 years old.
What Determines your Benefit Amount?
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Your retirement benefit amount depends on three things: your salary during working years, how long you worked while paying Social Security taxes and when you choose to retire. The higher your salary and the longer you worked full-time, the higher your benefit. However, if you choose to retire early (age 62) rather than waiting until full retirement age (either 65, 66, or 67 depending on your birth year), you will receive a reduced monthly benefit. On the other hand, if you wait until age 70 to retire, your monthly amount will be higher. Other Social Security benefits are calculated based on similar criteria---the only exception is SSI, which is a fixed amount in your state.
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Social Security Statement
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If you're at least 25 years old, you've started receiving Social Security Statements in the mail. Your statement provides valuable information about different Social Security programs and can be used as a tool to estimate how much you'll receive in future benefits. Here's how it works: the SSA calculates how much your future benefit will be, under the assumption that you'll continue working at your current job until age 62. It shows how much your monthly benefit would be at age 62, at your full retirement age and at age 70. However, your benefit will change if you change jobs or drop down to part-time.
Retirement Estimator
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You can also use the Retirement Estimator on the SSA's website for an idea of how much you might receive (see Resources). Note that you can't use the estimator if you're already receiving some form of Social Security benefits, or if you're age 62 or older and receiving Social Security benefits on another person's record.
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References
Resources
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