How to calculate what pension you will receive in America

Millions of Americans will file their taxes by April 15th. To prepare it, many people need to summarize salaries, tax withholding and contributions to retirement accounts for 2023. Tax season is a good reason to audit your pension savings, reports CNBC.

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The easiest way to check what you've already saved for retirement is to request a Social Security Statement. It contains information about how much a person paid in taxes for Social Security and to finance the Medicare program (preferential health insurance for retirees). Social Security Statement can be obtained from website of the Social Security Administration.

Formula for calculating pensions in the USA

Roughly speaking, a pension in the United States is 40% of a person’s average salary over 35 years of work. If you have more experience, then the 35 years with the highest income are selected for calculations. This formula only applies to older people who have reached the minimum retirement age (62 years).

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If you are still far from retirement, you can calculate your expected pension. This is done based on the income the person received in the last completed calendar year. The government makes a projection of his pension amount, assuming that he will earn the same amount by age 62. The Social Security Statement displays your expected pension amount calculated this way.

Of course, a person's actual pension may be lower or higher. This depends on his income in subsequent years.

Why You Should Check Your Social Security Statement Regularly

A Social Security statement shows a person's pre-tax income for each work year - amounts that will be used to calculate their pension. The Social Security Statement is the most detailed and user-friendly report of how much a taxpayer has earned. If you check it annually, you can notice and correct errors in the data in a timely manner.

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If the Social Security Administration receives incorrect information about a person's income (this often happens with freelancers or when changing jobs), it will definitely affect his pension. And the responsibility for the accuracy of the records lies with the person himself, and not with the Department.

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