THE MATH BEHIND YOUR SOCIAL SECURITY PAYMENT

THINKING RETIREMENT – ANDY LANDISLet’s go back to school to study the math behind your Social Security. A little understanding of the numbers goes a long way to avoiding retirement surprises and shortfalls. Like other pension systems, your Social Security is based on three factors: eligibility, earnings and age. The Social Security Administration (SSA) puts its own twist on each factor.

Math 101: Compute your eligibility – To be eligible for Social Security retirement payments, you need 40 Work Credits (WCs). You can earn up to four WCs per year, so they’re sometimes called quarters. In 2015, you earn one WC for each $1,220 you earn anytime in the year. So if you earn four times $1,220, or $4,880 in 2015, you get all four WCs for the year. (Only work where you pay Social Security taxes counts. The cost per WC generally increases annually with inflation.)  40 WCs ÷ four WCs per year = 10 years of part-time work needed for a retirement payment. Click here to continue your lesson in retirement math.

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