Written by Ascend Team
Updated Dec 1st, 2023
The information provided in this article does not, and is not intended to, constitute legal or financial advice; instead, all information, content, and materials available in this article are for general informational purposes only.
When we looked at other Social Security Calculators online, we found 2 key components that may be helpful that were missing from the calculation:
- Total estimated payout based on life expectancy
- Life expectancy based on age and gender where you live.
If you are going to make $100,000 more if you live until 92 vs 72, wouldn't that be important information to estimate.
As such, we built the following Social Security Calculator to help you estimate both your monthly estimate and your total monthly benefit. Please note that this is just an estimate, and we used the government social security calculator online to help us make the calculations, but there are still assumption that are made as with any calculator. We welcome your feedback though at support-team@tryascend.com if you'd like any updates or features added to this calculator.
Optimize Social Security Benefits with an Social Security Calculator
Often times when it comes to figuring out 'when' you should collect Social Security it can be a math problem. However, how do you go about solving it? That's the challenge, it can either be really hard to figure out or it's hard to find a Social Security Calculator. To simplify it though, let's cover some of the most important factors when it comes to calculating the 'best' time to collect Social Security benefits.
Estimate Social Security Benefits
As we understand how it can be quite complicated to figure out how to estimate Social Security, we built a 100% free Social Security Calculator below. It will ask you a few questions about your age, zip code, work history, etc. before making your estimated monthly payment.
How Does Age Impact Social Security?
When it comes to collecting Social Security, taking it at 62 years old compared to 70 years old could be the difference of $1,500/mo but $40,000 less in total. What does that exactly mean? Well, let's take the example below -- this individual has been working for 40 years and has made an average income of $60,000/yr. As it appears if they started collecting Social Security at 62 Years and 1 Month, they'd receive an estimated $284,568 for the estimated duration of their life. Of course, this doesn't take into account any traumatic life events but based on the average life span used in this example. So if they take it as early as possible, they'd potentially take the highest total amount but what if you're more focused on the the amount each month? If you're more focused on optimizing for the monthly amount, it could potentially make sense to wait until 70 years old in the example below.
How Does the Social Security Calculator Work
The Social Security Calculator is complicated, but we thought it would be helpful to describe how we built the Social Security Calculator in case you have any feedback or feature requests.
We get their age and the year that they turn 62, 65, 70, and their current income (which we use to calculate past years income). The max amount of years that can be used towards the benefit is 35. We do this whole calculation three times. Once to find the benefit for 62, once for 65, and once for 70. If they worked less than 35 years from when they turn 62, 65, or 70 then we just use 0 income for the remaining years up to 35.
Taking their current income, I traced back each year and used the average wage increase percentage (https://www.ssa.gov/oact/cola/awidevelop.html) to calculate the previous years income. Ex. if my income in 2023 was 60,000 and the average wage increase from 2022 to 2023 was 4%. The estimated income in 2022 would be: The current year’s income divided by 1 plus the percent wage increase or
60000 / (1 + 0.04). We also have to estimate the income for the future years up to when they turn 62, 65, and 70. We used a wage increase of 4% per year to calculate future income.
After we get each of the years estimated incomes. We have to index them to account for inflation. Ssa.gov also provides us with indexing factors that we apply to the income based on the year to properly account for inflation. However, those indexing factors for each year also change each year. You can enter the year you want to see the indexing factors for here https://www.ssa.gov/cgi-bin/awiFactors.cgi. We would just have to update them each year.
Once we have the indexing factors, we go through each year of income that we calculated in step 2 and multiply the income by the indexing factor for that year. For clarity, each year has a new set of indexing factors for the previous years.
2022 | 2023 |
Year | Indexing factor | Year | Indexing factor |
2021 | 1.000000 | 2022 | 1.000000 |
2020 | 1.000000 | 2021 | 1.000000 |
2019 | 1.0282553 | 2020 | 1.0889195 |
2018 | 1.0667897 | 2019 | 1.1196873 |
2017 | 1.1054553 | 2018 | 1.1616481 |
2016 | 1.1436295 | 2017 | 1.2037519 |
2015 | 1.1565527 | 2016 | 1.2453206 |
2014 | 1.1967896 | 2015 | 1.2593928 |
2013 | 1.2392711 | 2014 | 1.3032076 |
And so on..
Once we have all the indexed income amounts we calculate the average indexed monthly earnings or AIME. That is calculated by summing up all the indexed income for those 35 years and dividing by the total months which will always be 420.
After we calculate the AIME we have to run it through a couple of bend points to get the primary insurance amount or PIA. As with the indexing factors, the bend points change every year. For 2023 the bend points are 1115 and 6721. With the bend points there are 3 sections. The first 1115 and below, the second in between 1115 and 6721 and the third anything above 6721. 90% is taken from the first section, 32% from the second, and 15% from the last. So if our AIME happened to be 7000 and we ran it through the bend points we would sum 90% of 1115 which is 1003.5. Then 32% of the amount between 1115 and 6721 which is 5606. 32% of 5606 is 1793.92. And lastly 15% of anything over 6721. So 15% of 279 is 41.85. Then we add those three numbers together and get 2839.27. That is our PIA or the amount they would receive per month if they retired at 67 or the full retirement age.
To calculate how much they would receive at 62 or 70 we have to adjust again. For 62 we would do the same calculations in steps 1-5 except we would include the income only up to when they turn 62. Once we have the PIA we multiply the PIA by 0.7 For the benefit when they turn 70 we would do steps 1-5 but we would include the income all the way up until they turn 70 (again only up to 35 years) then we multiply the PIA by 1.24
To get the total benefit amount all I did was subtract the average life expectancy for the state by the age of retirement (62,67, or 70) and then multiply those years by 12 and by the monthly benefit amount for that age.
For example if our initial PIA was the number we calculated before $2839.27 and we want to retire at age 67 so we don’t have to adjust it. We would take the life expectancy in California for males 76.2 and subtract it by 67 to get 9.2. In 9.2 years there are 12 months so 9.2 x 12 x our monthly benefit of 2839.27 to get our total benefit amount of $313,455.41.
Social Security Benefits and Unsecured Debt
Something that folks are experiencing more and more is juggling unsecured debt payments while figuring out when to retire. However, do you collect Social Security as soon as you can? Would you be able to get out of debt cheaper, easier, and faster if you started collecting Social Security? That's definitely something to consider and think about. Depending on where you're at when it comes to juggling unsecured debt payments, here are a few things to think about:
- Are you currently making more than you would if you took Social Security?
- Are you able to continue to work your current job and collect Social Security?
- Is the debt current or past due? If it's falling behind, it may be a sign of a stronger hardship.
- What kind of debt is it? Is it mainly credit cards and/or personal loans?
- So far, what have you done to tackle the debt?
After taking some time to consider those 5 questions, you may be finding that you're unsure whether you should collect Social Security or keep working. If you have any questions, you're welcome to call us at 833-272-3631, as we specialize in helping people get out of debt cheaper, easier, and faster.
How are Social Security Benefits Funded?
You may already see a line on your paystubs for Social Security, which is exactly the main way Social Security is funded. Social Security is funded through a payroll tax, which should be around 6.2% of your wages. I believe there is a taxable maximum of $160,000, as of 2023. The maximum table earnings each year change, so it is important to keep a lookout for any changes. Below, you'll find the Social Security Maximum Taxable Earnings Table to further explain how this may change over time. 
When Should You Collect Social Security Benefits?
Everyone's situation is unique and it will ultimately come down to what makes the most sense for you, but here are a few things to consider:
- Do you have anything saved for retirement?
- Do you have any unsecured debt or obligations that you'd prefer to resolve first?
- Does Collecting Social Security now align with your future goals?
- Which age would allow you the estimated highest total payment?
- Which age would allow you the estimated high monthly payment?
Depending on where you're at, it may make sense to start by estimating your Social Security Benefits by taking the Social Security Calculator below:
