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How much can you expect to make? How Social Security payments are figured

May 21, 2012, 8:40 a.m.

Figuring out your Social Security payment amounts can be a real hassle. It's complicated and time-consuming and frustrating and headache-inducing if you don't have all the facts and figures at your disposal from the get-go. You will want to use a Social Security payment calculator to make sure that you know exactly what you're getting, but this quick guide should help you get an estimate:

Collecting at 62

Assuming that you were born in 1950 as of the time of this writing, the longer you work past 62, the higher return you can expect to see on your benefits. If you were born later, you may well wind up with more than we suggest. This guide is primarily for the 1950-and-later births.

Calculating your benefits with the government website's SSA calculator isn't really so difficult if you have the information handy. You simply take your income for each year, not exceeding the maximum amount (ranging from $3,600 in 1951 to over $100,000 in 2011), and multiply that by the index factor, which ranges from 14.89 in 1951 to 1.00 in 2011.

Once you have these all added up, take your 35 years with the highest earnings and add them up, then divide by 420, multiply the first $767 by 90%, the rest (up to $4,624) by 32%, and the rest by 15%. Add these three numbers together, round it down to the dollar, and there you have your expected retirement benefits each month at the age of 66. Cut that down by 3/4 and you have your benefits at age 62.

It sounds complicated, but once you get the pencil and paper out, it gets easier.

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