$75,000 Salary: How Much You Can Expect to Receive from Social Security in Retirement

According to Marca, Social Security is an important safety net for Americans as they plan for retirement. If you’re earning $75,000 a year and wondering how much you might receive from Social Security here’s a breakdown of how it works. To qualify for Social Security benefits you need to meet a few requirements. First you must reach the eligible retirement age which is 66 if you were born before 1955 or 67 if you were born after. As early as age 62 you are eligible to begin collecting benefits; however your monthly payments will increase accordingly. Earning at least 40 labor credits is another essential prerequisite. Your income and the length of time you’ve worked and paid into Social Security will determine how many credits you receive. Your annual salary of $75,000 entitles you to four credits.

The amount you’ll receive from Social Security is calculated using your average wage over the 35 highest-earning years of your career adjusted for inflation. If you’ve worked for more than 35 years the lowest-earning years will be discarded. If you’ve worked fewer years your earnings are still averaged over 35 years. Let’s break down the calculation for someone earning $75,000 annually which translates to $6,250 per month. The Social Security Administration (SSA) uses a formula where they pay 90% of the first $1,115 of your monthly wage. This would give you $1,003.50 per month. For the remaining income up to $6,250 the SSA pays 32% of each dollar. This adds another $1,643.20 to your monthly payment bringing your total Social Security benefit to $2,646.70 per month, or $31760.40 per year if you retire at your full retirement age of 67.

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$75,000 Salary: How Much You Can Expect to Receive from Social Security in Retirement (PHOTO: AARP)

However, your benefits can be adjusted depending on when you choose to start receiving them. If you retire early at age 62 your benefits will be reduced by about 30%. On the other hand if you delay retirement beyond 67, your benefits increase by 8% for each year you wait up to age 70. Social Security may not be sufficient to sustain your current level of living in retirement even if you make $75,000. It must be supplemented with investments and savings. Anticipating and comprehending the role of Social Security in your comprehensive financial plan can contribute to a more secure and enjoyable retirement.

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