how your social security benefit is calculated?
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We base Social Security benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then, Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.
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Social Security bases your retirement and disability benefits on the amount of income on which you've paid Social Security taxes—called "covered earnings." Your average covered earnings over a period of years is known as your average indexed monthly earnings (AIME).
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To calculate FICA tax contribution for an employee, multiply their gross pay by the Social Security and Medicare tax rates. For example, if an employee's taxable wages are $700 for the week, their social security contribution would be: $700.00 x 6.2% = $43.40. ... These are also the amounts the employer would pay.
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The amount of taxable social security wages is determined by subtracting the following from the year-to-date (YTD) gross wages on your last direct deposit statement. Health – subtract the YTD employee health insurance deduction. Dental – subtract the YTD employee dental insurance deduction.
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You can visit the Social Security website and use one of its online benefits calculators to determine your retirement estimate based on your earnings record. 4﻿ You can wait until you decide to start receiving benefits and let the SSA calculate the amount for you.
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For example, the AARP calculator estimates that a person born on Jan. 1, 1958, who has averaged a $50,000 annual income would get a monthly benefit of $1,499 if they file for Social Security at 62, $2,092 at full retirement age (in this case, 66 years and eight months), or $2,650 at 70.
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So, if you claim Social Security as soon as you turn 62 this year, you'll receive a monthly retirement benefit of $1,713.50 -- about $623 less per month than you'd get if you waited until full retirement age. On the other hand, if you were to wait until age 70, your benefit would be permanently increased to $3,022.
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The supplement is computed as if you were age 62 and fully insured for a Social Security benefit when the supplement begins. ... Divide the Social Security benefit estimate by 40 and multiply the result by the number of years you've been employed under FERS, rounded to the nearest full year.
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Your annual pension is calculated by dividing your total membership by 80 and multiplying this figure by your final salary pensionable pay.
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If you earn less than $128,400 in 2018, simply multiply your earnings by 0.062 to find your Social Security tax. For example, if your salary is $50,000, your 2018 Social Security tax will be $3,100. If you earn $128,400 or more, your Social Security tax is $7,960.80, no matter how much you earn.
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You calculate net earnings by subtracting ordinary and necessary trade or business expenses from the gross income you derived from your trade or business. You can be liable for paying self-employment tax even if you currently receive social security benefits.
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Social Security The increase is based on your date of birth and the number of months you delay the start of your retirement benefits. If you start receiving retirement benefits at age: 67, you'll get 108 percent of the monthly benefit because you delayed getting benefits for 12 months.
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To calculate Social Security withholding, multiply your employee's gross pay for the current pay period by the current Social Security tax rate (6.2%). This is the amount you will deduct from your employee's paycheck and remit along with your payroll taxes.
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Income Taxes And Your Social Security Benefit between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. more than $34,000, up to 85 percent of your benefits may be taxable.
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Social Security replaces a percentage of a worker's pre-retirement income based on their lifetime earnings. The amount of your average wages that Social Security retirement benefits replaces varies depending on your earnings and when you choose to start benefits.
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Social Security and Medicare are two other taxes withheld from every tax-paying worker. Social Security is calculated as 6.2% of your gross earnings.
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['Take your estimated Social Security benefit at age 62. ... ', "Divide the Social Security benefit estimate by 40 and multiply the result by the number of years you've been employed under FERS, rounded to the nearest full year."]