Planning for retirement can feel like a puzzle, especially when trying to estimate your Social Security benefits.
If you’re making $75,000 a year, you might be wondering how much you’ll actually receive once you decide to hang up your work boots.
Let’s walk through it together, breaking things down step by step.
Key Takeaways
- Earning $75,000 annually could result in a monthly Social Security benefit of around $2,680 at Full Retirement Age (67).
- Claiming early (age 62) reduces your benefit, while delaying until age 70 significantly increases it due to Delayed Retirement Credits.
- Taxes and other income can affect the amount of Social Security you keep, and tools like my Social Security can help estimate your benefits.
It All Starts with Earnings History
Your Social Security benefit is based on your lifetime earnings—specifically, the highest 35 years of your earnings, all adjusted for inflation. If you haven’t worked a full 35 years, zeros are included in the calculation, which can bring your average down.
But let’s say you’ve been working steadily and making around $75,000 per year. The Social Security Administration (SSA) uses a formula that involves something called Average Indexed Monthly Earnings (AIME) to figure out what your benefits will look like.
They take those highest 35 years, adjust them for wage growth, and come up with your AIME, which then feeds into the formula used to calculate your benefits.
Breaking Down the Primary Insurance Amount (PIA)
The Primary Insurance Amount (PIA) is essentially your monthly benefit if you choose to retire at your Full Retirement Age (FRA). For most people born after 1960, FRA is 67. But how exactly does the SSA get to that magic number?
For someone with an AIME (let’s say it ends up being around $6,250 per month if you’ve consistently earned $75,000), the PIA is calculated using a specific set of bend points. The current formula for someone turning 62 in 2024 looks like this:
- 90% of the first $1,174 of your AIME.
- 32% of AIME between $1,174 and $7,078.
- 15% of any amount over $7,078.
In your case, if your AIME is $6,250:
- 90% of $1,174 = $1,056.60
- 32% of ($6,250 – $1,174) = $1,624.32
- No amount is left for the 15% bracket since $6,250 is under $7,078.
Adding those together, you end up with an estimated monthly benefit of $2,680.92 if you claim at your Full Retirement Age.
How Your Age Affects Your Benefits
The age at which you decide to start taking Social Security has a huge impact on the size of your monthly check. Let’s break it down:
Claiming Early at Age 62
You can start claiming Social Security as early as age 62, but there’s a catch: taking benefits early means they’ll be reduced.
The reduction is around 30%, meaning you’d receive about $1,876.64 a month instead of the full $2,680.92. The trade-off here is getting money sooner, but less of it each month.
Full Retirement Age (FRA) at 67
If you wait until 67, you’ll get the full $2,680.92 per month. No reductions, just the full amount based on your earnings history.
Delaying Until Age 70
Patience can be rewarding. If you hold off on claiming benefits until age 70, you’ll earn Delayed Retirement Credits, which boost your benefit by about 8% for each year you delay past your FRA.
This means your monthly check could increase to approximately $3,323.94—a nice jump if you can afford to wait.
Cost-of-Living Adjustments (COLA)
Social Security isn’t completely static. Each year, your benefits are adjusted based on inflation, thanks to Cost-of-Living Adjustments (COLA).
For example, if there’s a 2.5% COLA in 2025, the average monthly benefit of $1,920 would bump up to about $1,968.
This adjustment helps ensure that your buying power keeps up with rising prices, even though it might not feel like a big leap year to year.
Will Your Social Security Be Taxed?
Social Security benefits aren’t always tax-free, which catches some people by surprise. The taxation of benefits depends on your overall income.
If you have substantial additional income—like wages, retirement account withdrawals, or investment earnings—up to 85% of your Social Security benefits could be subject to federal income taxes.
The key here is understanding your combined income, which includes half of your Social Security plus any other earnings, to figure out how much of your benefits will be taxable.
Tools to Estimate Your Personalized Benefits
Want a clearer picture of what your Social Security check will look like? The SSA provides several online tools to help you plan:
- my Social Security Account: Creating an account lets you check your earnings record and see personalized estimates.
- Retirement Estimator: This tool uses your actual earnings record to give you a pretty good idea of your future benefits.
- Quick Calculator: A simpler tool that provides rough estimates based on current earnings.
You can find all of these resources on the official SSA website. They’re easy to use and can help you make more informed decisions about when to start taking benefits.
Claiming While Still Working
If you decide to start receiving benefits before your Full Retirement Age and keep working, keep in mind there’s an earnings test. If you earn above certain limits, a portion of your benefits could be withheld.
But don’t worry, once you reach your FRA, the withheld benefits are recalculated, and you might get some of it back through a higher monthly check later on. For 2024, the earnings limit for those below FRA is $21,240.
If you exceed this limit, $1 is withheld for every $2 earned over the threshold. The year you reach FRA, the limit goes up, and once you hit FRA, the earnings test disappears altogether.
Spousal and Survivor Benefits
Marriage can add another layer of complexity, but it also provides some unique opportunities when it comes to Social Security:
- Spousal Benefits: If your spouse has a higher earnings record, you could be eligible for up to 50% of their benefit, depending on your age and their claiming strategy.
- Survivor Benefits: If your spouse passes away, you may be eligible for survivor benefits, which can help soften the financial blow during an incredibly challenging time.
Government Pension and Social Security (WEP and GPO)
If you worked in a job that didn’t pay into Social Security—such as certain government jobs—your benefits might be reduced due to the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO).
Both provisions aim to adjust Social Security payouts for those who receive pensions from work where they didn’t contribute to Social Security.
- WEP affects your own Social Security benefit.
- GPO impacts spousal or survivor benefits.
These provisions can be confusing, but they’re worth understanding if you’re in a public sector job. They can make a substantial difference in your benefit amount.
Pulling It All Together
So, if you’re making $75,000 a year, your Full Retirement Age Social Security benefit is estimated at $2,680.92 per month. But the actual amount you’ll receive depends on when you start claiming and factors like taxation, spousal benefits, and potential reductions if you’re still working.
It’s important to think about your lifestyle needs, your health, and your financial goals when deciding when to claim. If you need the money sooner, taking early benefits might be the right choice—even if it means a smaller check.
On the other hand, if you can wait, delaying until age 70 provides a significant boost to your monthly income, which can be a real help later in life.
Final Thoughts
Social Security is a key part of most people’s retirement plans, but it works best when paired with other savings, like a 401(k) or an IRA. The more you understand how Social Security fits into your overall retirement strategy, the better prepared you’ll be when it’s time to decide when to start those checks.
To get a personalized estimate, create a my Social Security account and check your Retirement Estimator. Both can provide clarity on what you’re looking at for retirement. And don’t hesitate to reach out to a financial advisor—retirement planning is too important to leave to chance.
In the end, Social Security won’t replace all of your income—it’s meant to cover about 40% of your pre-retirement earnings, on average. But knowing what to expect can help you plan, save, and feel a little more confident about the road ahead.
