Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Get a 1% yield bump on your first investment in commercial real estate, Earn easy 1099 income with quick surveys for healthcare professionals with InCrowd, Register with All Global Circle and receive a bonus of up to $50, This website uses cookies to improve your experience. You can see this published list on theNational Average Wage Index page. "The 2020 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds." Average Indexed Monthly Earnings (AIME): Shown on the X axis, the more you earn (and pay SS taxes on), the higher your Social Security benefit. For the 10 year period ending September 30, 2017, 9 of 9 Vanguard money market funds, 55 of 58 Vanguard bonds funds, 22 of 22 Vanguard balanced funds, and 128 of 137 Vanguard stock funds - for a total of 214 of 226 Vanguard funds--outperformed their Lipper peer-group average. Ive already paid all mine due to my clinical income, so an additional dollar paid to me only pays income and Medicare taxes. Even for high-income professionals, the target audience of this blog, Social Security will be a significant portion of retirement spending. Yes, the ones SS sends you assumes youll be working until when you start taking benefits. Continuing to pay FICA after the 2nd bend point is essentially worthless, nearly a pure tax. Your lifetime earnings are converted to a monthly average based on the 35 years in which you earned the most, adjusted for inflation. Social Security Benefits for Children: How They Work, Social Security Dependent Benefits: Your Guide, How Social Security Survivor Benefits Work. "Fact Sheet: 2022 Social Security Changes. The third column shows the wage index factors, as published in 2021. Investopedia does not include all offers available in the marketplace. Invest better with The Motley Fool. Since Social Security will make up at least a significant minority of our retirement income, it is important to understand how it works. Not a doctor, but still find lots of value in what you write. "Average Indexed Monthly Earnings(AIME). The Social Security website has a full table. This formula is based on something called "bend points.". It spit this out when I first did this in 2020. Because there's a lag time to updating AWI, indexing always relies upon the AWI figure from two years prior to the age you turn 62, or your age 60 AWI. He did not apply for his own benefits at the time I applied for mine because we wanted to maximize the total benefits. Learn More. If you don't, you could end up disappointed with the amount of money you end up collecting from Social Security in retirement.
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