How to Calculate Your US Pension: A Useful Formula

The average US resident of the same age received more than $ 1500 in pension per month in 2020. Since retirement benefits are addressed to nearly 9 out of 10 people aged 65 and over, the system is an important part of life after retirement. CNBC.

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The amount of retirement benefits depends on your income, year of birth, and the age at which you decided to retire.

Important to remember: America's social security system is not designed to be the only source of income after retirement, and the bottom line is constantly changing, so you need to take retirement savings seriously anyway.

The first Social Security retirement check was issued in the United States in 1940 for $ 2254. By 2019, the average retired American was receiving $ 1471 a month. About 9 in 10 people age 65 and older receive retirement benefits in the United States.

How much pension can you expect if you earn $ 50 a year?

So, if you have a traditional job paying $ 50 a year, then 000% of your salary, or $ 6,2 of that, will go into retirement deductions each year. The employer gives the same amount for you. But calculating how much you will receive when it comes time to retire is not that easy.

If you are 62 years old and your average salary was $ 50 per year, you worked from 000 to 1979, then the US Social Security Administration will calculate your 2019 years of experience with the highest earnings, adjust for inflation (so the amount will not be round) and divide the resulting $ 35 by 1 (762 years x 687 months). The end result is $ 420. This is Average Indexed Monthly Savings (AIME), which is your average monthly salary over the past 35 years.

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For a 62-year-old with 35 years of experience, the highest AIME amount for 2019 was $ 10.

Your pension amount will depend on the so-called inflection points of the earnings schedule. The system resembles tax brackets. Used like this:

• you will receive 90% of the first $ 926 AIME;
• 32% - from the next $4657 or less;
• 15% - from the amount above $5583 and below $10.

This system was designed to help retirement people whose salaries were low. The less money you made, the higher the percentage of salary you can receive in retirement.

If you take a salary of $ 4167, then from the first $ 926 earnings you will receive 90% ($ 833). From the remaining $ 3270, you will receive 32% ($ 1046). This will end up with your monthly retirement benefit of $ 833 + $ 1046 = $ 1879.

These numbers may vary, but they give a general idea of ​​what to expect when it's time to retire. More details can be found on the official website. Social Security Administration.

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