Millions of Americans earn modest wages throughout their careers, sometimes never making more than $40,000 a year.
They still pay into Social Security with every paycheck and expect those contributions to turn into a monthly retirement benefit.
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But how much does a lifetime at that income level actually translate into once the checks start arriving? Here’s how much Social Security you’d get if you never earned more than $40,000.
Lifetime Earnings Matter
Social Security benefits are tied to how much a worker earned over time.
The Social Security Administration (SSA) looks at a person’s 35 highest-earning years when calculating retirement benefits. Those wages are adjusted for inflation and averaged into a monthly figure. That number is then used in the formula that determines a retirement check.
Workers who spent their careers earning less, including those who never made more than $40,000 a year, generally receive smaller monthly benefits.
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Typical Monthly Benefit
Someone who spent their career earning about $40,000 a year could receive roughly $1,300 to $1,400 per month in Social Security at full retirement age, based on estimates from the SSA benefit calculator using a sample worker born in 1960.
The exact amount depends on when benefits begin. Claiming at age 62 results in a smaller monthly payment. Waiting until full retirement age, which is 67 for someone born in 1960, produces a larger check. Delaying benefits until age 70 increases the monthly amount even more.
What That Buys
A Social Security check of $1,300 to $1,800 a month equals about $15,600 to $21,600 a year. For many retirees, that amount may cover basic expenses such as housing, groceries and utilities, especially in lower-cost areas.
However, it may not stretch as far in cities with higher rents or health care costs. According to the SSA, Social Security is designed to replace 40% of a worker’s income in retirement, which means many retirees rely on savings, pensions or other income sources, as well.
Retirement Income Gap
Retirees need about 70% to 80% of their pre-retirement income to maintain a similar lifestyle after leaving the workforce, certified financial planner Ryan Johnson wrote for Ameriprise Financial.
For someone who earned $40,000 a year, that could mean needing roughly $28,000 to $32,000 a year in retirement income.
If Social Security provides about $15,600 to $21,600 annually, that leaves a significant gap. Many retirees fill the difference with savings, pensions, part-time work or other sources of income.
Final Take To GO
For workers who spent their careers earning modest wages, the key is understanding what Social Security might realistically provide.
Seeing a number like $1,300 to $1,400 a month can help turn a vague expectation into a clearer picture of retirement income.
From there, workers can start thinking about how the rest of their retirement plan might come together, whether through savings, other income or changes in spending.
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This article originally appeared on GOBankingRates.com: How Much Social Security You’d Get If You Never Earned More Than $40K
