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The Percentage of Income You Might Get From Social Security

May 3, 2016

Social Security is designed to be a pension system that replaces income when people retire.  However, it is not designed to be a full pension that replaces your entire income.

It is therefore important to know what percentage of your current monthly income you will receive in monthly Social Security benefits after retirement.

MP900411753Social Security was not originally intended to provide retired Americans with a full monthly income. It certainly was never intended to sustain retirees in the same standard of living after retirement indefinitely.

Instead, the system was designed to address elderly people living in poverty while giving greater benefits to those putting more money into the system. As such, Social Security only gives retired Americans a percentage of their pre-retirement income as discussed by My San Antonio in "How Much of My Income Will Social Security Replace in Retirement?"

Of course, this begs the question of exactly what percentage of your income you can expect to receive in monthly Social Security benefits when you retire. Unfortunately, the answer to that question is "it depends."

Generally, the system is designed to give American's 40% of their pre-retirement income, but what that means for any individual varies widely. Generally speaking, the less you earn now the more of your income Social Security will replace. This is because when calculating a monthly benefit the first $856 of income is multiplied by 90% while income between that amount and $5,157 is multiplied by 32%. Income above $5,157 is multiplied by 15%.

Fortunately, there is no need to be too confused. Many Social Security benefit calculators can be found and elder law attorneys can tell you what to expect.

Reference: My San Antonio (Feb. 28, 2016) "How Much of My Income Will Social Security Replace in Retirement?"