The first check that was cashed from Social Security was about $23.00 in 1940. If you are a retiree in 2020, the minimum amount of money you will receive from Social Security benefits is $1,500 a month. Social Security benefits are crucial for retirement since more than 90% of people receiving Social Security benefits are above age 65.
The monthly amount you will receive from Social Security depends on your earnings, the age you claim your Social Security benefits, and the birth period. You should note that the money from your Social Security will not necessarily cover all your expenses. It would help if you didn’t think that your Social Security will serve as your only source of money when you retire. Because conditions change, you have to save more for your retirement. You can make your savings into defined contribution plans such as an IRA or a 401(k) plan.
How much will you receive from Social Security if you earn $45,000 as your yearly income?
The basis for your Social Security benefits is your average monthly income, your birth year, and when you start receiving your Social Security benefits. If you are making $45,000 per year from your regular job, you will pay nearly 6.2% of your salary to Social Security. When you pay this percentage, you will pay about $3,000 as taxes on your Social Security in a year. Your Social Security is then merged into the company where you work.
If you were 62 years old in 2019, your average lifetime earnings are $45,000. Social Security is based on your highest earnings in 35 years while considering the rate of inflation. The summation of your 35 years’ highest earnings is divided by 420. The estimate will be the average index of your monthly earnings.
Once you know your average monthly index, you will receive your Social Security benefits depending on your bend point. The bend point is similar to your tax bracket, but it will give you more money instead of collecting your money. The bend point is used because it allows people with low earnings to get a higher percentage of their salary back.
The bend point works based on the average index of your monthly earnings. Three bend points are used to calculate your Social Security. If your yearly income is $45,000, the first bend point benefits will give you 90% of your first $926 earnings, and this will be approximately $800. The second bend point benefits will provide you with 32% of your earnings between $926 and $5,583, and this will be roughly $904. You don’t need to bother about the third bend point because your monthly earnings do not exceed $5,583.
If you earn $45,000 yearly, your expectations from Social Security should cover some of your expenses. You will receive about $1,700 per month from your Social Security check. Although this amount may vary, this will give you an insight into what you should expect from Social Security.