Comparing your past, current, or future retirement earnings to those of others isn’t always helpful. Either way, we may not be able to do much about it. And there is always more to the story. For example, some low-income people may have no debt at all, while others are paying off huge loans.
Still, comparisons like this can help you get an idea of where you stand financially. They usually satisfy your repressed curiosity.
Here, we take a closer look at how much the average retiree is, or will be, taking out of Social Security.
how are you doing
The table below shows the average amount of social security checks that current retirees cash or deposit each month. Retirees in their 60s earn a median monthly income of $1,457, while retirees aged 90 and over earn just over $1,600 a month.
| Age group | Median monthly Social Security payments |
|---|---|
| 60-69 | $1,457 |
| 70-79 | $1,681 |
| 80-89 | $1,671 |
| Over 90 | $1,601 |
Data Source: Social Security Administration.
Were you surprised that the largest checks weren’t at either end of the range?
Actually, it makes sense if you think about it for a moment. The longer you wait to start receiving your Social Security retirement benefits, and the older you get, the higher your payment will be. Young retirees are spending less money on their monthly bank bills, but they are likely to continue to do so for a long time to come.
Meanwhile, the oldest retirees, who are not doing as well as retirees in their 70s and 80s, started paying benefits at a time when wages were relatively low, even after adjusting for inflation. The method in which cost-of-living adjustments are calculated ex post facto puts older retirees at a slight disadvantage each time an adjustment is made.
Not yet retired
But if Social Security payments are a distant future for you, where can you expect to stand compared to your peers then?
It’s hard to think of a comparison like this. Because we need projections based on numbers that can (and probably will) change now and then.
However, it is still possible to derive plausible and realistic estimates.
The table below shows it, but there are a few things to be aware of. First, the dollar amounts are current dollars, not future dollars. Second, the age at which Social Security benefits are collected is set at 66. And third, this estimate estimates that annual wages will increase as these hypothetical people age and gain more valuable work-related experience. In other words, the average 25-year-old who currently earns about $35,000 a year will make an inflation-adjusted income of $55,000 at age 55. If you have income above or below these medians, your future payments will naturally increase or decrease.
| current age |
current median |
Future monthly forecast Severance pay |
|---|---|---|
| twenty five | $35,000 | $1,579 |
| 35 | $52,776 | $2,041 |
| 45 | $57,000 | $2,055 |
| 55 | $55,000 | $1,853 |
Data Sources: US Census Bureau and Social Security Administration. Here’s an estimated calculation by the author: SSA.gov.
As always, filing early will significantly reduce your monthly payments, but waiting until you’re old enough to start receiving benefits will significantly increase your future Social Security payments. For reference, the average monthly Social Security check for someone who reaches full retirement age at age 66 (he’s 67 depending on the year of birth) is $1,782 for him, but for someone who started receiving benefits at age 20 is he about 30% lower. 62. Withholding Social Security retirement claims until age 70 increases them by nearly 25%.
By the way, you can get detailed and personalized benefit projections from Social Security. Just set up an account on his website for the organization.
Good to know, but this is just the beginning
Shocked? pushed down? Aren’t you overjoyed to know you’re doing better than average?
Be careful not to get too emotional in either case. Just because you’re performing better than the average of your peer group doesn’t mean you’ll be able to maintain your current standard of living in retirement. Social Security is only meant to supplement your retirement income from your own savings. So the benchmarks above are just a starting point to a more complete financial plan.
In any case, it’s better to start with some benchmarks than to start with nothing.
If you’re not sure where or how to start building a plan like this, this is a good place to start.
