What is the average amount received from social security

To determine how much money you'll receive in benefits, Social Security's formula considers the length of your work history, the amount of money subject to payroll taxes you earned over your career, and when you first decide to collect benefits.

It does this by applying its average wage index to your income history and then calculating the average monthly income based on your 35 highest-earning years. They include zeros for any of your 35 years without income. The resulting figure is your primary insurance amount , or PIA. Third, Social Security only pays your PIA if you retire at full retirement age , which ranges from age 66 to age Retire earlier than that, such as when you're first eligible at age 62, and you'll receive less than your PIA.

Retire after full retirement age, and you'll receive a bigger benefit, thanks to delayed retirement credits more on that in one minute. The variability in how much money people receive in Social Security benefits might surprise you. The difference is likely because Social Security's formula penalizes people with fewer than 35 years of work history, and many women take time away from their careers to raise children, putting them at a disadvantage in attaining a year work history.

Wage inequality likely plays a role, too, because benefits are based on average incomes. The variability in Social Security income, regardless of gender, is substantial, as well. However, about 2. The best way to increase your Social Security benefit is to increase income subject to payroll taxes during your career.

Consistent pay increases at your primary job are important, but a second job might make sense if a raise from your employer isn't in the cards. A word to the wise, though: Make sure any extra income you earn is subject to payroll taxes, because if the earnings aren't reported, it won't increase your Social Security benefit. Another way to bump up your Social Security is to make sure there aren't any zero earnings years in your work history.

While this significant increase in benefits may seem like something to celebrate, it's not all good news for retirees. However, that doesn't necessarily mean they'll feel like they have more money to spend. Each year's COLA is a reflection of the inflation that occurred in the prior year. A bigger benefit boost only means that inflation has also increased more substantially, making the necessities of life more expensive.

And while COLAs are intended to prevent benefits from losing buying power, by and large, they haven't quite achieved that. In addition, Medicare premiums are also increasing due to inflation. Next year's COLA will be historic, and you should notice the significantly larger checks once the adjustment takes effect. However, that benefit bump might not have as much of an impact on your finances as you would hope. Discounted offers are only available to new members.

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Updated December 24, When should I file to get the biggest Social Security benefit?