Invest Wisely

How Will Social Security Retirement Benefits Be Calculated in 2018?

by Megan Roth5 min read
Social Security Retirement Benefits

Here is how the Social Security Retirement benefits will be calculated in 2018, based on the changes that will take place in Social Security 2018. The 3 main factors that impact your Social Security payout are

  • The 35 highest earning years which will be used to calculate your PIA
  • Your age for full retirement
  • From what age you actually start collecting Social Security


Already on Social Security?

If you are already getting your Social Security payout, then your per month benefit will simply be balanced using the 2018 COLA Calculator.


New Beneficiaries

First, you need to figure out what your Primary Insurance Amount, or PIA, is. This is how it is calculated:

  • The top 35 earning years of your career (that have been adjusted for inflation) are then averaged out and then divided by 12, which will give the average indexed per month earnings.
  • This average per month earning is used to calculate what your PIA should be. In 2018, the formula is:  
    • 90% of $896 in averaged and indexed per month earnings,
    • 32% of the range $896 and $5,399
    • 15% of anything over $5,399


Retirement Age

The next factor that will impact your Social Security payout will be your age for full retirement. This age will depend on when you were born, but it is generally between 66 and 67 years. In 2018, those who were born in 1956 will be eligible for Social Security and will be eligible for full retirement at the age of 66. If you want to find out your age for full retirement, then you can check it at SSA – Full Retirement Age.


Age when you Start Collecting your Social Security Retirement benefits

The amount of Social Security Retirement benefits you get per month are dependent on which age you start to avail of the benefits. If you choose to avail of your Social Security benefits at the Normal Retirement Age, then you stand to lose a lot of money. Put really simply, the longer you wait after retirement to avail of your Social Security benefits, the more you will get – till the age of 70.


Here’s how it works:

  • 36 months (3 years) before the age of full retirement, your PIA will be reduced by 6.66% per year.
  • More than 36 months or 3 years, and the deduction is about 5% per year.


So, if you decide to take your Social Security 4 years before your full retirement, you will get about 25% less.

However, if you wait till your full retirement or even longer, you will gain money. For every year that you wait, you get an 8% boost in your PIA – right up to the age of 70.

A quick guide to figuring out how much of a payout you will get can be found in the SSA Retirement Chart.