Spending during retirement is the most important driver of retirement planning, yet how much you can spend is extremely difficult to nail down.
Betterment’s calculator can help.
In addition to income from wages or investments—earned prior to or during retirement, respectively—the calculator considers all your contributions paid toward Social Security Administration (SSA) benefits.
Now, anyone can estimate how much Social Security income to anticipate during retirement, based on desired age of retirement, and both current and projected income.
Get started now to calculate how much Social Security income you could receive in retirement:
How We Built the Calculator
Betterment estimates the income to be received from Social Security based on the following criteria:
- The taxable income paid into Social Security over a working lifetime.
- The starting age for benefits to begin.
- Whether there is a future reduction in benefits.
Betterment uses all of these factors to estimate Social Security income as part of total retirement income.
Using current income, age, marital status, projected retirement age, salary growth, and inflation, Betterment estimates lifetime earnings, and then uses this information to calculate the normal retirement age benefit according to the SSA benefit rules.
Our calculator assumes an inflation rate of 2%, and average salary growth of 1% above inflation, however these settings can be adjusted in the case of an anticipated salary increase.
Age to Start Receiving Benefits
For those born after 1942, retirement benefits go up by 8% for every year that you can defer benefit payouts, from ages 62 to 70. This means that recipients who wait to start receiving Social Security benefits will receive 8% more in income than the prior year, from ages 62 to 70.
Our calculator uses your desired retirement age, and then matches it to the nearest eligible age to receive benefits, but you can adjust this setting to see how it impacts estimated Social Security income.
As an example, the chart below depicts projected Social Security benefits received at a full retirement age of 66 years old (for someone born between 1943 and 1954):
Monthly Benefits by Age You Start Receiving Benefits
This example assumes a benefit of $1,000 at a full retirement age of 66
Future Social Security Benefits
Given the projected budget deficits in Social Security trust funds, some customers prefer to plan for retirement assuming partial or zero Social Security benefits.
According to the SSA, zero benefits are not likely, but it currently predicts that younger workers may only receive three-fourths of their benefits because of the deficit. As a result, Betterment defaults to three-fourths of calculated benefits unless you change this in the assumptions.
Retirement Planning with RetireGuide
Betterment’s Social Security income calculator is a preview of how RetireGuide helps our customers.
RetireGuide recommends the amount of savings needed for retirement based on income—including Social Security income—and holistically considers balances across all synced 401(k), savings, checking, and investment accounts, with and outside of Betterment.
RetireGuide even considers where customers choose to retire, analyzes scenarios for taxes, and always provides a range of outcomes—from worst to likely case. Better yet, RetireGuide is available at no extra cost to Betterment customers.
To get started with RetireGuide, click “Set up plan” next to any retirement account on the Summary page. For those without retirement accounts, choose “Set up plan” from the dropdown on the Advice tab. Get started with RetireGuide now.
When deciding whether to roll over a retirement account, you should carefully consider your personal situation and preferences. The information on this page is being provided for general informational purposes and is not intended to be an individualized recommendation that you take any particular action.
Factors that you should consider in evaluating a potential rollover include: available investment options, fees and expenses, services, withdrawal penalties, protections from creditors and legal judgments, required minimum distributions, and treatment of employer stock. Before deciding to roll over, you should research the details of your current retirement account and consult tax and other advisors with any questions about your personal situation.