How Much Can I Earn While on Social Security Disability?

A reader writes in, asking:

“Can you recommend an book/author that can help me learn about Social Security disability benefits for my adult disabled child? In particular, I would like to know how much he can earn before it impacts what he may receive from my SS retirement benefit.”

The definition of disability for adult disabled child cases is the same as for cases in which a person is receiving a disability benefit on their own work record.

You can find the disability-related chapters of the SSA’s POMS here. (The POMS is essentially the SSA’s comprehensive internal manual.)

To initially qualify as disabled, a person must be unable to engage in “substantial gainful activity.” For 2020, the threshold for substantial gainful activity is $1,260/month (or $2,110/month for a person who is blind).

However, once a person has already qualified as disabled, there is a different (lower) earnings threshold that becomes relevant. If a disabled person’s earnings in a given month exceed a certain threshold ($910 in 2020), it triggers a “trial work period.” A person’s disability benefit will not be terminated due to their earnings during the trial work period. If a person has 9 months of earnings above that threshold ($910 in 2020) during any rolling 60-month window, the trial work period ends, and then the following rules kick in, to determine whether their disability benefit actually gets terminated. (Of note: the 9 months don’t have to be consecutive.)

After a person’s trial work period ends, they aren’t necessarily permanently considered no-longer-disabled. Rather, after the trial work period, the person enters a 36-month “re-entitlement period.” (The rules for this period are sometimes referred to as the “extended period of eligibility” rules.) During this re-entitlement period, the first time that the person’s earnings exceed the substantial gainful activity threshold ($1,260 in 2020), it triggers their “grace period.” This grace period lasts 3 months (the first month with excess earnings and the following two months). During the grace period, the person will continue to receive their benefit, regardless of earnings level. After the 3-month grace period though, for the remainder of the re-entitlement period, the person’s benefit is determined month-by-month. (If their earnings exceed the SGA threshold, they get no benefit. If their earnings are below the threshold, they get a benefit.)

After the 36-month re-entitlement period ends, the person’s benefit is permanently terminated in the first month in which they earn more than the SGA threshold.

Retroactive Applications for Social Security Benefits

When you file an application for any of the following types of Social Security benefits:

  • Retirement benefits,
  • Spousal benefits,
  • Widow(er) benefits,
  • Child benefits,
  • Mother/father benefits, or
  • Dependent parent benefits…

…you have the option of backdating your application by up to 6 months. That is, you can file retroactively, thereby getting a lump sum for those 6 months of benefits and having your benefit calculating going forward as if you had filed 6 months earlier.

Example: You file for your retirement benefit at age 68 and 10 months. You ask for the maximum retroactivity. Result: your monthly benefit will be what it had been if you had filed for it to begin at age 68 and 4 months, and you will receive a lump sum for 6 months of benefits.

Two Important Exceptions

Exception #1: You cannot backdate an application for retirement, spousal, or widow(er) benefits to a month earlier than your full retirement age. For example, if you reach your full retirement age in February of a given year and you file for retirement benefits in April of that year, you can only backdate your application back to February.

Exception #2: If you are filing for a) disability benefits or b) spousal/widow(er)/child benefits based on the work record of somebody who is currently entitled to Social Security disability benefits, you can backdate your application by up to 12 months rather than the normal 6 months. (If it is an application for spousal benefits though, it will still be limited by exception #1 above.)

Avoiding Accidental Retroactive Applications

When you file a Social Security application online, the application asks when you want your benefits to start. Similarly, if you file by phone or in person, the SSA employee with whom you speak is supposed to ask when you want your benefits to start. But there have been cases in which the SSA employee doesn’t ask. Instead, they just start the applicant’s benefit immediately, with the maximum possible retroactivity (i.e., seeking to give the applicant the largest immediate lump sum possible). And, in some cases, that’s not what the applicant actually wanted.

So it’s always important to be clear about exactly when you want your benefit to begin (e.g., “I want my benefit to begin effective October 20xx, at age 69 and 7 months”).

But Didn’t the Rules Change?

Contrary to a common misconception, the Bipartisan Budget Act of 2015 (i.e., the law that made a bunch of changes to Social Security several years ago) did not change any of the above rules.

With regard to retroactive benefits, what that law eliminated was the ability to retroactively unsuspend benefits. (You used to be able to file at full retirement age, immediately have your benefits suspended, then at a later date choose to retroactively unsuspend — thereby getting a lump sum for all the months you would have received if you hadn’t suspended. But this retroactive unsuspension is no longer an option.)

How Does the Social Security Earnings Test Work?

If you:

  1. Are younger than full retirement age,
  2. Have filed for a Social Security benefit of some kind, and
  3. Are working…

…then the Social Security earnings test could result in some or all of your benefit being withheld. It could also result in withholding of benefits that anybody else is receiving on your work record (e.g., your spouse’s benefit as your spouse).

Specifically, the Social Security earnings test says that, in any year for which you will be younger than full retirement age throughout the entire year, for every two dollars you make in excess of a certain threshold ($18,240 for 2020), one dollar of your Social Security benefit (or somebody else’s benefit on your work record) will be withheld.

Example: In 2020, Bob is 63 years old and has already filed for his retirement benefit. He earns $40,000 over the course of the year. As a result, the earnings test will cause $10,880 of his benefits to be withheld in 2020. (That is, the excess of $40,000 over $18,240, divided by two.)

Earnings Test in Year of Full Retirement Age

In the year in which you reach your full retirement age, the earnings test works somewhat differently. Specifically:

  • The threshold is higher. (Again, you can find it here.) For 2020, it’s $48,600.
  • Only your earnings prior to the month in which you reach full retirement age will count toward the test.
  • One dollar of benefits is withheld for every three dollars of excess earnings rather than every two dollars of excess earnings.

Example: Jane filed for her retirement benefit in a prior year. Jane reaches her full retirement age in August of 2020. She earns $8,000 each month throughout the year. Because she reaches her full retirement age in August, it is only her earnings from January-July that will count toward the earnings test. So that’s $8,000 x 7 = $56,000. Given the 2020 threshold of $48,600, she has $7,400 of excess earnings. We then divide $7,400 by three, and we see that the earnings test will cause $2,466 of Jane’s retirement benefit to be withheld in 2020.

Earnings Test After Full Retirement Age

In years after the year in which you reach your full retirement age, your earnings will not result in the earnings test withholding any benefits. (However, as we’ll discuss below, if you are receiving a benefit as a spouse, and your spouse is younger than full retirement age, his/her earnings could cause your spousal benefit to be withheld — even if you are older than full retirement age.)

What Counts as Earnings?

Wages, salary, commissions, tips, net earnings from self-employment, and a few other less common forms of income count as earnings for the earnings test. (You can find the full list here.)

Interest, dividends, capital gains, IRA/401(k) distributions, rental income, pensions, and several other types of income do not count as earnings for the earnings test. (You can find the full list here.)

How Does the Actual Withholding Work?

When you file for a Social Security benefit, the SSA will ask you to estimate your earnings for that year. Your earnings test withholding will be based on that estimated amount. Then, once the year is over and your actual earnings amount is known, you settle up with the SSA. (That is, if too little was withheld, you will be required to pay the additional amount that should have been withheld. Conversely, if too much was withheld, the overwitheld amount will be paid back to you.)

Another key point is that the withholding from the earnings test is not applied evenly (pro-rata) throughout the year. Instead, your monthly Social Security benefit is completely withheld until the necessary amount of annual withholding has occurred.

Example: Mary is 64 years old, and she filed for her retirement benefit last year at age 63. Her monthly retirement benefit (prior to considering any withholding) is $1,500. If her earnings for the year are such that $6,000 needs to be withheld, her benefit will be completely withheld from January-April. Then she would receive her normal $1,500 for each month from May-December.

If Mary’s earnings were slightly higher and the earnings test said that $6,300 needed to be withheld, then her benefit would be completely withheld from January-May (resulting in $7,500 being withheld). Then, at the beginning of the following year, she would receive back the $1,200 of overwithholding.

How Does the Earnings Test Affect Spousal (and Child) Benefits?

As a result of your earnings, the earnings test can result in the withholding of:

  • Any benefit you are receiving, and
  • Any benefit that somebody else is receiving on your work record (regardless of their age).

Example: Lynn and John are married. They have each filed for their own retirement benefits. In addition, because Lynn’s earnings history is considerably higher than John’s, John has filed for his benefit as Lynn’s spouse.

If Lynn is younger than full retirement age, her earnings could result in her retirement benefit and John’s benefit as her spouse being withheld (even if John has reached his FRA). Lynn’s earnings cannot, however, result in John’s own retirement benefit being withheld.

If John is younger than full retirement age, his earnings could result in his retirement benefit and his benefit as Lynn’s spouse being withheld. His earnings cannot, however, result in Lynn’s retirement benefit being withheld.

To reiterate, if you are younger than FRA, your own earnings can cause any benefit that you are receiving (e.g., retirement, spousal, survivor) to be withheld. And, if you are younger than FRA, your own earnings can result in somebody else’s benefit as your spouse (or child) being withheld (even if that person has reached their FRA). But your own earnings cannot result in anybody else’s own retirement benefit being withheld.

Do You Get the Withheld Benefits Back at Some Point?

On the SSA website, you will find the following statement:

“It is important to note that any benefits withheld while you continue to work are not ‘lost’. Once you reach [full retirement age], your monthly benefit will be increased permanently to account for the months in which benefits were withheld.”

Many people misinterpret this to mean that they will receive a lump sum when they reach FRA, to repay any benefits that had been withheld. To be clear, that is not what happens.

Instead, when you reach FRA, your benefit is recalculated, and any reduction that had previously been applied due to having filed early will now be reduced (yes, the reduction is reduced) based on how many months of benefits were withheld.

Example: You originally filed for your retirement benefit 30 months prior to your full retirement age, but the earnings test resulted in your benefit being withheld for 13 months. Effective as of your FRA, your benefit will be recalculated as if you had only filed 17 months early rather than 30 months early.

The “Grace Year” Rule

According to the “grace year” rule, the earnings test will not result in withholding of benefits for any non-service months in a grace year.

A non-service month is a month in which you earn less than 1/12 of the normal earnings test annual threshold amount (so, $1,520 for 2020) or in which you do not perform “substantial services” for your business if you are self-employed.

And your grace year is the first year in which you have a non-service month after having filed for a retirement/spousal/survivor benefit.

Example: Monica retires in June of 2020 at age 64, and she files for her retirement benefit to begin in the following month (July). By the time of her retirement, she had already earned $70,000 for the year. If Monica earns less than $1,520 in each of the following months (i.e., July-December), the earnings test will not cause any of her benefits to be withheld, even though she earned far beyond the annual threshold amount for the year.

A key point about the grace year rule, however, is that it does not prevent withholding of somebody else’s benefit on your work record.

For example, in the example above, if Monica were married and her husband were receiving a spousal benefit on Monica’s work record, her husband’s spousal benefit could still be withheld July-December due to Monica’s annual excess earnings, despite those months being non-service months in Monica’s “grace year.”

What is a Social Security Primary Insurance Amount (PIA)?

A person’s primary insurance amount (PIA) is the amount of their monthly retirement benefit, if they file for that benefit exactly at their full retirement age.

If you file for your retirement benefit prior to your full retirement age, your monthly retirement benefit will be less than your primary insurance amount.

If you file for your retirement benefit after reaching your full retirement age, your monthly retirement benefit will be greater than your primary insurance amount.

You can find more details about the calculation of monthly retirement benefits here.

Social Security Planning for a Couple with Similar Earnings History

A reader writes in, asking:

In giving advice to a married couple, you frequently differentiate what the higher-earning-record spouse should do and what the lower-earning-record spouse should do. I’ve not seen you mention what a couple should do where both spouses have nearly identical earning records. How should a married couple apply the typical high-earner/low-earner advice?

  1. Even if there’s only a one dollar difference in their earning records, still follow the higher-earning-record/lower-earning record recommendation that you describe?
  2. Both spouses should follow the typical advice for the higher-earning-record-spouse?
  3. Both spouses should follow the typical advice for a single person?
  4. Or something else?

Or there is no rule of thumb for that situation?

In short, it still makes sense to follow the same general plan as for other couples in which:

  1. You begin the analysis with one spouse filing at 70 and the other filing at 62 (or 62 and 1 month if their DoB is not the first or second of the month),
  2. Then you move the “age 62” date later if you’re concerned about longevity risk, or
  3. You move the “age 70” date earlier if you need the cash flow.

But which spouse should be the one to file early, and which should be the one to file late? Basically, we want to know whose benefit at age 70 would be larger. So if their respective earnings histories are similar, the next thing to look at is the spouses’ respective full retirement ages. For example if the wife has a full retirement age of 66 and the husband has a full retirement age of 67, it’s more advantageous for the wife to delay, because her benefit at age 70 would be 132% of her “primary insurance amount” (because 70 is 48 months beyond her FRA), while his benefit at age 70 would only be 124% of his PIA (because 70 is only 36 months beyond his FRA).

If they have nearly identical PIAs as well as identical FRAs, then the one in better health should be the one to delay (because they’re the one most likely to make it to age 70, to allow the benefit to max out).

If they have identical PIAs, identical FRAs, and roughly identical life expectancies, then it probably doesn’t matter very much which spouse files earlier and which spouse files later.

Of note, the above analysis assumes there are no additional complicating factors.

One complicating factor that would be fairly common is the earnings test. If one spouse plans to work beyond age 62 (and therefore would have their benefit subject to withholding via the earnings test), then that spouse should likely not file any earlier than the date on which they quit work — or in some cases January of the year in which they reach FRA. (The specifics would depend on their level of earnings.)

For reference, all of these factors (and several others) are accounted for by the Open Social Security calculator. The above is just my attempt to explain the general decision making process.

Why Delaying Social Security Doesn’t Provide an 8% Return

One of the most commonly given reasons for delaying Social Security is that doing so “provides you an 8% return.” But that’s just not true. It doesn’t.

Firstly, the increase in benefits from delaying is not 8% for most years. By delaying from 62 to 70, you get about 76-77% more per month than you would get if you started your benefit at age 62. (The exact percentage depends on whether your FRA is 66, 67, or somewhere in between.) That works out to an average annual increase of about 7.4%. For the exact details of how your filing age affects your retirement benefit, see here.

The second and more important issue though is that this figure is not a return. To know the actual return you would get from delaying Social Security, we’d have to know how long you will live (and how long your spouse will live, if you’re married).

To explain, consider this hypothetical example: you give me $100 today, and I give you $8 one year from now.

What return did you get? It’s not 8%. To have earned an 8% return you would have had to go from $100 to $108 over that year. Instead, you went from $100 to $8. That’s a -92% return.

Now, imagine instead that you give me $100 right now, and I give you $8 one year from now and another $8 the year after that. Now you’ve gone from $100 to $16. Still not good, but quite a bit better. A higher rate of return.

Point being: You need to know how long you will collect this income in order to calculate a rate of return.

With regard to delaying Social Security, we can calculate an expected return based on life expectancies. But that figure turns out to be nowhere near 8% in most cases. For an average unmarried male, the expected return from waiting to file for Social Security works out to about 1.8% above inflation. For an average unmarried female, it’s about 3% above inflation. For a married person, it depends on the difference in ages between the two spouses as well as the difference in primary insurance amounts. (In short, it’s usually significantly higher for the higher earner in the couple and lower for the lower earner in the couple.)

Still, a majority of people (as in, “more than 50%” — not “almost everybody”) will be well served by waiting. Specifically, the higher earner in married couples should usually wait all the way until 70. Most unmarried people will want to wait (though not necessarily all the way until 70). And some lower earners in married couples will want to wait — though it’s pretty uncommon for age 70 to be the ideal choice there.

How Do Child-in-Care Spousal Social Security Benefits Work?

In order to qualify for child-in-care spousal benefits:

  1. Your spouse must be collecting a retirement or disability benefit, and
  2. You must have in your care a child who is under age 16 (or disabled) and who is receiving child benefits on the work record of your spouse.

Like regular spousal benefits, the amount of a child-in-care spousal benefit is 50% of your spouse’s “primary insurance amount” (PIA) — that is, 50% of the monthly retirement benefit that they would get if they claimed their retirement benefit exactly at their full retirement age.

Also like regular spousal benefits, your child-in-care spousal benefit will be reduced if you are simultaneously receiving a retirement benefit. (Specifically, it will be reduced by the larger of your own retirement benefit or your primary insurance amount.)

Unlike regular spousal benefits, you do not have to be age 62 in order to receive child-in-care spousal benefits. In fact, there is no minimum age at all.

Also unlike regular spousal benefits, child-in-care spousal benefits are not reduced for early entitlement. (For example, if a person files for child-in-care spousal benefits 3 years prior to their full retirement age, they’d still get the full amount, whereas a person filing for regular spousal benefits 3 years prior to full retirement age would only get 75% of the full amount.)

Also unlike regular spousal benefits, filing for child-in-care spousal benefits cannot cause a “deemed filing” for retirement benefits. This opens up some strategies for receiving spousal benefits while allowing your own retirement benefit to continue growing.

Example: Bob and Jane are both age 62. Their daughter, Ellen, is disabled and lives with them. Bob has a higher earnings history than Jane. A strategy that is available to them is as follows:

  • At age 62, Jane files for retirement benefits. Ellen files at that time for child benefits on Jane’s work record. Bob files for child-in-care spousal benefits. (This will be a restricted application — for just spousal benefits, not his own retirement benefit.)
  • When he reaches age 70, Bob files for his retirement benefit, at which point his child-in-care spousal benefit ends. Ellen files for child benefits on Bob’s work record so that she can receive a larger child’s benefit. If applicable, Jane also files at this time for spousal benefits on Bob’s work record.

When you lose eligibility for child-in-care spousal benefits (i.e., when your youngest child reaches age 16, if you have no disabled children), what happens depends on your age at the time.

If you are younger than full retirement age when your youngest child reaches age 16, your child-in-care spousal benefit will be suspended. If you are at least age 62 (or when you do reach age 62), you have the option to begin regular spousal benefits by filing Form SSA-25. If you do so, your benefit will be reduced for early filing. When you file Form SSA-25, the normal deemed filing rules will kick in. (That is, you will automatically be deemed to have filed for your own retirement benefit as well, if you had not already done so.) If you don’t file Form SSA-25, your regular spousal benefit will still begin automatically upon reaching full retirement age, and the normal deemed filing rules will apply at that time.

If you have reached your full retirement age by the time your youngest child reaches age 16, your child-in-care spousal benefit will simply become a regular spousal benefit (i.e., will continue at the same amount). And the normal deemed filing rules will apply at that time.

Finally, one important point of note whenever there is a child receiving child’s benefits is that the total household benefit will be subject to the family maximum rules (or combined family maximum rules, if both spouses are receiving their own retirement benefits).

Can You Receive Social Security Spousal Benefits AND Retirement Benefits at the Same Time?

A reader writes in, asking:

“When I used the open social security calculator, the result showed my wife receiving both a retirement benefit and a spousal benefit. I thought it could only be one or the other?”

That’s a common misunderstanding. In reality, you can get spousal and retirement benefits at the same time — and it’s super common. In fact, it’s more common for a person to receive both than it is for a person to receive spousal benefits alone.

In short, once a person begins receiving their own retirement benefit, they will continue to receive that retirement benefit for the rest of their life, even after their benefit as a spouse begins.* And their spousal benefit — originally calculated as half of the other spouse’s primary insurance amount — will be reduced by the greater of their own PIA or their own retirement benefit. (See this article for more details of how a spousal benefit is calculated.)

The relevant material on the SSA’s site can be found here.

*There are some exceptions. For instance, a person’s retirement benefit will stop temporarily if they choose to suspend it. Alternatively, the earnings test could result in their retirement benefit being withheld if they are working while younger than full retirement age.

How Are Social Security Spousal Benefits Calculated?

To understand Social Security benefit calculations, you first need to understand one piece of jargon: “primary insurance amount” (PIA). A person’s primary insurance amount is the amount of their monthly retirement benefit, if they file for that benefit exactly at their full retirement age.

A Social Security spousal benefit is calculated as 50% of the other spouse’s PIA. Note that the age at which the other spouse files for Social Security benefits doesn’t affect this calculation.

Example: Jane files for her retirement benefit at age 63 and is therefore receiving a retirement benefit that is smaller than her PIA. Jane’s husband Bob files for a benefit as Jane’s spouse. Bob’s spousal benefit will initially be calculated as 50% of Jane’s PIA. (Key point being: it’s 50% of Jane’s PIA, rather than 50% of what she’s actually receiving.)

If Jane had filed for retirement benefits after her full retirement age (and were therefore receiving an amount larger than her PIA), Bob’s benefit as Jane’s spouse would still be calculated as 50% of Jane’s PIA. Again, the age at which Jane files for retirement benefits does not affect the amount that Bob can receive as Jane’s spouse.

Complicating Factors: Spousal Benefit Reductions

An assortment of other factors can come into play, which could reduce your benefit as a spouse. For example:

  • If you are receiving a retirement benefit of your own, your spousal benefit will be reduced.
  • If you file for spousal benefits prior to your full retirement age, your spousal benefit will be reduced.
  • If you are receiving a government pension from work that wasn’t covered by Social Security taxes, your spousal benefit will be reduced by the “government pension offset.”
  • If your spouse is disabled or if you have a minor child or adult disabled child, the family maximum rules may result in your spousal benefit being reduced.
  • If you are collecting a spousal benefit while under full retirement age and you are working, the earnings test may result in some or all of your spousal benefit being withheld.

We will discuss the GPO, family maximum rules, and earnings test in other articles. For now, we will discuss only the first two potential sources of reduction: entitlement to your own retirement benefit and filing prior to full retirement age.

Spousal Benefit Reduction Due to Own Retirement Benefit

If you are receiving a retirement benefit of your own, your benefit as a spouse will be reduced by the greater of:

  1. your PIA or
  2. your monthly retirement benefit.

Example: In addition to receiving a benefit as Jane’s spouse, Bob is also receiving a retirement benefit of his own. Because he is entitled to a retirement benefit of his own, he will not receive the full spousal benefit (i.e., 50% of Jane’s PIA). Instead, his spousal benefit will be reduced by the greater of a) his own PIA or b) his monthly retirement benefit.

Spousal Benefit Reduction Due to Early Entitlement

If you file for a spousal benefit prior to your full retirement age, that spousal benefit will be reduced due to early filing. The reduction is 25/36 of 1% for each month early, up to 36 months. For each month in excess of 36 months, the reduction is 5/12 of 1%.

Example (continued): Bob’s full retirement age is 67. Bob files for his retirement and spousal benefits at age 65 (i.e., 24 months early). As a result, his spousal benefit will be reduced by [24 x 25/36 of 1%] — or 16.67%.

The final calculation of Bob’s spousal benefit will be 83.33% x (50% of Jane’s PIA, minus Bob’s PIA). And to that, we would add Bob’s own retirement benefit to find the total amount of his monthly benefit.

How to Calculate a Social Security Benefit, When You Retire at a Different Age Than You File for Retirement Benefits

A reader writes in, asking:

“My Social Security statement provides me with three different estimates of my retirement benefit (62, 67, 70). But each one includes an assumption that I actually work until the age in question. How could I find what my benefit would be if, for example, I work until 60 but then wait until 70 to start taking my retirement benefit?”

The SSA has a few tools on their website that can help answer this question. (The open-source “Social Security Tools” website is another good option.)

The SSA’s “AnyPIA” Detailed Calculator would do the job, but it has a steep learning curve and does not work for Macs.

So let’s instead use one of two simpler tools:

  1. The “Online Calculator” (WEP version here, for people who will be receiving pensions from employment that was not covered by Social Security taxes), or
  2. The Retirement Estimator, which does the same thing as the Online Calculator, but which pulls in your earnings history automatically (after you sign in) rather than having you manually enter your year-by-year earnings.

In either case, the calculator will ask you what year you plan to retire. Be sure to enter the year you plan to retire, not the year in which you plan to file for benefits (unless they happen to be the same year).

Then the calculator will tell you what your retirement benefit would be if you file as soon as you retire (or at age 62, if the age you enter as your planned retirement age is younger than 62).

From there we have to do a little bit of arithmetic. First we have to determine your primary insurance amount (i.e., your “PIA” which is the monthly amount of your retirement benefit if you file at exactly full retirement age) based on the benefit estimate the calculator has provided. Then we can figure out what your benefit will at any given filing age.

As we’ve discussed elsewhere, your retirement benefit is calculated as a percentage of your PIA, depending on the age at which you file.

  • If you file for retirement benefits before your full retirement age, you get less than your PIA. Specifically, your benefit receives a reduction equal to your primary insurance amount times 5/9 of 1% for each month (up to 36 months) prior to full retirement age. This works out to a reduction of 6.67% per year. For each month in excess of 36 months, the reduction is 5/12 of 1% (or 5% per year).
  • If you file for retirement benefits after your full retirement age, you get more than your PIA. Specifically, for each month you wait beyond FRA (up to age 70), you get one delayed retirement credit, which is worth 2/3 of 1% of your PIA. This works out to an increase of 8% per year.

So to find an estimate of your monthly retirement benefit, you’ll need to take the following steps:

  1. Figure out the percentage of your PIA that the calculator thinks you are getting (because it’s assuming you file on your planned retirement date, or at age 62 if your planned retirement date is before age 62).
  2. Divide your estimated retirement benefit by that percentage, to find your PIA.
  3. Multiply your PIA as necessary based on your actual planned filing age to find your appropriately estimated benefit.

Example #1: Your full retirement age is 67. You enter your earnings history and you tell the calculator that you plan to retire at age 60. The calculator tells you that your retirement benefit at 62 would be $1,000.

We know that 62 is 5 years (60 months) prior to your full retirement age. The reduction for filing 60 months early is (5/9 of 1% x 36) + (5/12 of 1% x 24), which works out to a 30% reduction. So we know that the benefit that it’s quoting (for age 62) is 70% of your primary insurance amount.

So we divide $1,000 by 0.7 to get your PIA, which is $1,428.57.

And we can multiply that as necessary to find your retirement benefit at any given filing age. For example, your benefit at 70 would be 124% of your PIA, or $1,771.

Example #2: Your full retirement age is 66 and 6 months. You enter your earnings history and you tell the calculator that you plan to retire at age 68. The calculator tells you that your retirement benefit at 68 would be $1,500.

We know that 68 is 18 months beyond your full retirement age. The increase for waiting 18 months beyond FRA is 2/3 of 1% x 18, which works out to a 12% increase. So we know that the benefit that it’s quoting is 112% of your primary insurance amount.

So we divide $1,500 by 1.12 to get your PIA, which is $1,339.29.

And we can multiply as necessary to find your benefit at any giving filing age. For example, your benefit at 69 would be 120% of your PIA, or $1,607.