sad to say it's based on the year you retire...to me not fair but ??

i'd hate to see you lose a dime at the higher salery...with the way the things are going, 50 seems to be the cut off line for age 66 retirement with full bennies...at least you have full retirement...i 'm lacking a quarter and will have to depend on dh's

" My question is if I make say $24,000 will my benefits be based on the last years instead of the $45,000 that I am making now?"

Yes.

I had no idea. I thought it was based on how much you put into the S/S system over the years.

The link in this post explains how the SSA calculates individual monthly benefits by averaging.

I don't even want to try to explain it...too late in the day for this old lady to do the math.

Here is a link that might be useful: SS benefits calculator,from SSA

Gosh, I did not know that. Thank goodness my last year working was also my highest earnings year. Dumb luck.

I believe your benefits are based on your entire working history. I personally haven't worked fulltime in over 30 years. And I'm getting almost $800/mo in SS. Obviously, if you work less, and put in less, your benefits won't be as high as if you continued working at a higher salary, that's a given. But you won't lose the credit for all the years you DID work at the higher level, either, I don't think.

But I'd strongly suggest you call up SS and make an appt. at your local office and sit down with them and discuss your options. I found they were all VERY helpful, very pleasant and very willing to answer every question DH and I had about our benefits. Get the right answers from the right people--always a good idea.

It is not based on your earnings the last year, but your entire work record & they take your highest (30?) years. High salaries in the early years might have a bigger impact than in later years. The advice to speak to someone at the SS office & read @ SS.gov is good. SS can be sliced & diced many different ways depending on your unique situation. LOTS of good info on their website.

SS has a wonderful telephone system and they will answer any question that you ask of them as assalea said...It is a great system and they are there for the purpose of helping you and we have always found them eager to answer any questions....so as Assalea said....get the answer from the "horse's mouth".

Your SS benefits are not based on the last year you worked. It looks at your highest paid 35 years over your entire working career. It goes something like this:

The calculation will be made over 35 years which is 420 months. First, your record is searched for 35 highest paid years. If you do have that many, then there will be some years counted as zero years. Next, the older years are indexed to sort of bring them up to todays dollars. The factors used is something like a cost-of-living adjustment, but in my humble opinion, the adjustment falls short of the actual inflation rate. However, the same index is applied to everybody be they rich or poor. For example, if you earned $100 30 years ago, the adjustment factor might be 4.5, so your $100 income made 30 years ago would be adjusted to 4.5 x 100 or $450 in current dollars. This is done for each year using a different factor for each year. If there are zero years, these are included also. The 35 highest paid years are used or all the years if there is less than 35.

All of the adjusted years are totaled and then divided by 420, the number of months in 35 years. This becomes the average monthly income figure that is used to determine your benefit.

Clear as mud? I hope it is a little better than that.

Go to the social security site to find this information. The indexing list should be there and it may change some for each passing year.

The formula for using the average indexed monthly taxed earnings for computing the benefit should be there.

Good advice here. I made an appointment with my SS office and the woman I met with was extremely helpful and knowledgeable. It helps to talk to someone who has been trained rather than collecting "heresay" from others.

You should make an app. with the SS office or call them. Cutting your salary basically in half at age 50 would have some impact, though I'm not sure how much. For many people, their 40's & 50's are their highest earning years. You would want to have as many high earning years counted as possible.

Your Social Security Retirement benefit check amount is based on your highest 40 years of earnings. To get even a small payment, you need at least ten years of work. So if you've worked less than 40 years, there will be some "zeroes" added in. And no, you can't "freeze" your earnings record. That's just a myth...If you stop working now, or cut back to part time, you will get less money than if you continue working and earning the maximum taxable amount for SS. The maximum right now is over $100,000.

I was a SAHM with minimal earnings. My DH and I are both retired and receiving SS. My SS benefit is half of my DH's benefit. (Together, we receive 1.5 of his benefit.) I don't know if both spouses have to be receiving benefits for this to apply.

I was quite surprised to discover that a spouse of a marriage of at least ten years is entitled to a SS benefit based on the higher-earning spouse's entitlement. My divorced cousin was able to retire due to this provision. She and her ex-DH's subsequent wife each received the same benefit.

Take a close look at how your benefits will increase each year you postpone taking them. With today's low interest rates, you can't beat those percentages. (At the time my DH and I applied for SS we could beat those odds by investing in CD's; not today.)

SS computes the spousal benefits thusly: First, it computes the spouse's benefit using the ususal calculation based on lifetime earnings, and then it compares this to 50% of the other partner's benefits and uses the greater of the two. This levels the playing field somewhat for a stay at home spouse who raised the kids and kept house without a formal paycheck. (That was an important job also, but unrecognized.) It also allows a formal wage earner spouse to collect his/her fair share when it exceeds the 50% amount of the other partner's benefit.

This is irrelevent to the OP. My DH "got retired" (fired) last month and went on SS @ 64. I did too @ SAHM 63 yrs. old. And now I found out SS is taxed even if you don't work. (If you work, you lose $1 for every $2 you earn at his age.) And our COBRA is &1000/mo. which is way cheaper than other insurance DH had researched. Yikes. Obamacare is not happening with us.

Not sure what you mean about the Obamacare, but it isn't in affect yet. (2014) Lots of early retires (not Medicare age yet) are looking forward to it. Of course your dh will be able to get Medicare next year. If you are younger, you'll probably want to check into it. Might surprise you. ;)

SS doesn't start to get tax until your MAGI is > $32k for a married couple.

Here is a link that might be useful: SS taxable?

drewsmaga -- You're paying $12K a year for health care insurance? And that's *better* than a previous plan? Wow.

Our Part B Medicare is about $2400 a year. We have a supplementary that pays the 20% Medicare doesn't pay; that costs another thousand. Our Part D coverage totals about $800. That's about $4200 a year and co-pays on meds only.

Not unusual. As a partner/owner I pay the full amount of our premiums for DH and me out of pocket --approx -14,600 annually plus co-pays. It is a good plan and we've been well pleased with it. This the first year in a which we haven't had a rate increase. Our firm does pay a substantial portion for our employees, to keep their out of pocket manageable (and to recruit and retain great employees) My brother pays about the same through his agricultural group policy. I am very much looking forward to medicare in 7 years. My Mom's Medicare + supplemental has been fantastic.

On to the SS question. You can run various scenarios on the SS website. I was somewhat surprised to learn that I maxed out for the last 30 years and DH is close. We won't go into all the considerations for a few more years, but sometime between the next 4 to 12 years or so we will need to make the call. As it stands right now I will probably continue to work close to full time until around 62 then hopefully back down to an "of counsel" position for a while as I phase out of full time practice. I suspect that DH will sell his practice about the same time but probably will do some locum tenons from time to time.