Nobody likes to believe they're average, but statistically speaking, half of any population will always be "average" in a particular area.
Take Social Security benefits. While some people will bring home the maximum payout each month, others will bring home the minimum. Somewhere in between is the average.
🚨Don’t Miss this amazing Black Friday Move! Get 60% off TheStreet Pro. Act now before it’s gone 😲
Anyone who has spent a lifetime working and paying into "the system" year after year can't help but wonder how much of that money they will actually see when they retire.
Related: Don't make this Medicare mistake if you wait to file for Social Security benefits
More than 72 million Americans receive Social Security benefits each month, and 51.3 million of them are retirees.
The amount of money you'll ultimately bring home when you start receiving Social Security benefits depends on several Social Security Administration (SSA) calculations — some quite complicated.
More on retirement:
- The average American faces one major 401(k) retirement dilemma
- How your mortgage is key to early retirement
- A few simple tasks can help you thrive in retirement
To arrive at your monthly benefit, the SSA adjusts your income history into current dollars, called "indexed earnings." (There are annual limits the SSA will consider, however — $168,600 in 2024 — so the calculation isn't quite as straightforward as it might seem.)
Then, once the Social Security Administration calculates your indexed earnings, they add up the top 35 earning years and then divide that total by 420 (12 months x 35 years = 420). The final number is your monthly indexed earnings.
Shutterstock
How retirement age affects Social Security benefits
Once the SSA has determined your average monthly indexed earnings, it then uses several additional calculations to reach a final number. Two of the most important considerations are the year you were born, and the year you intend to start receiving benefits.
In 2024, people who were born in 1960 or later are eligible for their full retirement benefit at age 67. So, if you elect to start receiving benefits at age 62 — the first year you're eligible — you'll receive 70% of your benefit.
If you wait until 67, you'll get your full benefit. On the other hand, if you wait until age 68, you'll receive 108% of your benefit. And if you wait until age 70 to start collecting, your monthly payment will go up by approximately 124% of your benefit.
Related: Dave Ramsey sounds alarm on Social Security for retired Americans
To put those calculations into real amounts, consider a person who is entitled to receive $1,500 per month if they wait until age 67 to collect benefits. They will receive just $1,050 at age 62. Over the course of decade or two, that difference could add up to tens of thousands of dollars.
Shutterstock
Here is the amount an average American receives from Social Security in 2025
With all those considerations taken into account, the average monthly payment for a person receiving Social Security benefits in 2025 will be $1,976, an increase of about $50 from 2024, according to the Social Security Administration.
To help you figure out how much you can expect from Social Security, it's worth spending a few minutes with the SSA's detailed online calculator. It takes into account your age, the age at which you intend to retire, and your annual income. To make this step even easier, simply sign up for a "My Social Security account" which links your individual earnings record to the calculator.
Using the SSA calculator you can also get estimates for your monthly benefit depending on which month you retire between ages 62 and 70.
Related: Veteran fund manager sees world of pain coming for stocks
