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retirement planning

How to Calculate Your Social Security Retirement Benefit

by
Laura Williams
CFP®, ChSNC® - Senior Financial Advisor

March 27, 2025

The picture shows a blackboard with figures on it to represent calculating your Social Security benefit.

 

If you’re planning for retirement, you’ve likely wondered what you can expect in Social Security payments. Most people know that they’re entitled to monthly benefits, but few understand how those benefits are calculated or what they can do now to make the most of them later. 

 

In this article, I’ll break down the formulas and factors that shape your Social Security retirement benefit. From identifying your Average Indexed Monthly Earnings (AIME) to translating those earnings into your Primary Insurance Amount (PIA), I’ll share clear, step-by-step explanations of how the math works, why timing matters, and what your Social Security retirement benefit means for your long-term financial planning. 

 

Log in to Sensible Friends to read the full analysis and see how your earnings history, birth year, and filing decisions will all shape your future retirement income. 

 

You’ll learn: 

  • How to calculate your benefit, starting with your Average Indexed Monthly Earnings (AIME) 
  • What bend points are, and how they provide a higher percentage benefit to lower-income earners 
  • The key differences between filing age, eligibility age, and retirement age—and how they affect your payout 
  • The significance of the age 62 for Social Security benefits 
  • How filing early or delaying past your full retirement age can permanently increase or reduce your monthly benefit 
  • How Social Security benefits fit into a broader financial plan and impact your long-term income goals 

 

Planning for retirement involves more than setting a date. You need to know where your retirement income will come from, and how much of it will be from your Social Security benefit. By learning how the Social Security Administration calculates your benefit, you can make more informed decisions about when to file, how to manage your income, and what kind of monthly income you can reasonably rely on. 

 

Log in to Sensible Friends to see the full calculation and find out what you should expect from Social Security. 

Single Premium Immediate Annuities (Part 2): Who Benefits Most from a SPIA?

by
Rick Fine
MBA, RMA®, CFP® - Principal and Director of Financial Planning

February 25, 2025

A SPIA is one of the simplest and most effective ways to secure a reliable stream of income in retirement, but it’s not one-size-fits-all.

Single Premium Immediate Annuities (Part 1)

by
Rick Fine
MBA, RMA®, CFP® - Principal and Director of Financial Planning

February 24, 2025

A Single Premium Immediate Annuity (SPIA) is a plain but powerful way to ensure predictable lifetime income.

What You Need to Know About the SECURE Act 2.0 

by
Frank Napolitano
J.D., CFP®, CFA® Charterholder - Senior Financial Advisor

January 29, 2025

The picture show the Capitol Building in Washington, D.C. where laws, like the SECURE Act are made.

The passage of the SECURE Act in 2019 made big changes to the Internal Revenue Code. What will that mean for you?

Annuities: Confusing and Scary, or Good Investments?

by
Rick Fine
MBA, RMA®, CFP® - Principal and Director of Financial Planning

November 18, 2024

The image is of a confusing pattern because annuities are often confusing.

Annuities can be confusing and therefore, scary. They can also be valuable opportunities for the right investor.

Your Social Security Account Is Changing

by
Brandon Garneau
Associate Financial Advisor

August 29, 2024

The picture shows a man in his 50s or 60s on a laptop because he is logging into his Social Security account.

The Social Security Administration has made changes to the login procedure. Here is what those changes will mean for you.

The Five Biggest Medicare Mistakes 

by
Rick Fine
MBA, RMA®, CFP® - Principal and Director of Financial Planning

April 1, 2024

The photo is of a dropped ice cream cone to represent the five biggest Medicare mistakes.

Medicare is complicated and people don’t always get it right. Research is vital. What are the 5 biggest Medicare mistakes?

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This content reflects the opinions of Sensible Financial®. We may change it at any time without notice. We provide this content for informational purposes only. Although we endeavor to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. We do not intend the information contained in this website as investment advice and we do not recommend that you buy or sell any security. We do not guarantee that our statements, opinions or forecasts will prove to be correct. Past performance does not guarantee future results. You cannot invest directly in any index. If you attempt to mimic the performance of an index, you will incur fees and expenses which will reduce returns. All investing involves risk. You can lose any money you invest. There is no guarantee that any investment plan or strategy will succeed.

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