How much Social Security for you?

I just saw an article in Cafemom that got me thinking….

Apparently Social Security benefit statements won’t be mailed this year!   To figure it out you need to do the math…..

Social Security Benefits are calculated based on your 35 highest earning years – and are adjusted for inflation.  The current calculation – if you are 62 in 2011, take the first $749 and multiply by 90%, then the next $3,768 and multiply by 32%…. Finally multiply the rest by 15%…..  The sum of these three amounts equals the initial monthly payment amount.  Starting at 62 you also receive a cost of living increase…

You won’t get the full payout unless you wait until full retirement age, it will be reduced if you file early or raised if you delay filing.

There are lots of other things to take into account, like if you are married should you file under your own benefits or your spouse, what happens with Medicare and how much will it deduct.  What age is there no additional benefits after to delay filing and so on…..

Finally the really interesting thing is that if you have less that 35 years that you paid into Social Security then those years count as zero.  Some people don’t realize their employer doesn’t pay social security until years later.  Our first 18 years of work we worked for the State of Illinois at a University.  Turns out they are exempt from Social Security and have their own system….. Thus we both have several 0 years.  Since moving to Kentucky I have just finally this year reached the minimum number of years paying Social Security to even draw anything….  It’s really good to check early and keep an eye on your earnings.

There are also so many things to take into account, everything from life expectancy to investment income (would you make more collecting the earnings now and investing or delaying)?