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To save money, the Social Security Administration stopped mailing annual Social Security statements to workers this year. These four-page mailings gave workers a personalized estimate of their expected Social Security payments based on their actual earnings history. Now workers will have to go online to get this estimate, and only some of the information provided in the statements is available online. Here's a look at how to predict how much you will get from Social Security in retirement.
Consider the averages. In June 2011, the average Social Security benefit was $1,180.80 per month. The maximum possible benefit for a worker retiring at age 66 in 2011 is $2,366. But to get this amount, the worker would need to earn the maximum taxable amount, currently $106,800, each year after age 21.
Familiarize yourself with the formula. Social Security benefits are calculated based on your 35 highest-earning years in the workforce, and are adjusted for inflation. If you don't have 35 years of earnings, zeros are averaged in for the years you didn't work at a job in which you paid into Social Security. The proportion of your income that is replaced by Social Security varies based on how much you earn. Consider a worker who turns 62 in 2011. To calculate his benefit, the first $749 of his average monthly earnings is multiplied by 90 percent, the next $3,768 by 32 percent, and the remainder by 15 percent. The sum of these three amounts equals his initial monthly payment amount. Workers also have cost-of-living increases added to their benefit beginning at age 62, even if they don't begin to receive benefits until a later year.
Try different retirement dates. The date you first sign up for benefits also has a large impact on how much you will receive. "The biggest effect you can have...