I Calculated My Social Security Contributions – Here’s What I Discovered About My Benefits

A Reddit poster calculated his Social Security benefits and made a discovery. It’s an important one that everyone should be aware of as lawmakers consider what, if any, changes should be made to the Social Security program. 

Here’s what the Redditor discovered about his benefits

So, what did the poster discover?

He explained that he had looked up online the amount both he and his employer had contributed to Social Security on his behalf. He then took that number and calculated the interest earned over time. After doing this calculation, he concluded that nobody is giving” him anything he didn’t earn, and that even the amount of interest he is paying while his benefit is accumulating is helping to keep the current Social Security benefits program solvent. 

Now, this may sound unsurprising to many people. In fact, many Reddit users chimed in to make clear they were already aware of this “discovery,” with one person saying it is an “entitlement program” because “you earned it, so you are entitled to it.” Another poster said, “It’s not a gift or a handout. You earned it. I wish more people understood this.”

However, the reality is that not everyone knows how Social Security is funded or how the benefits program works. Some people assume that it’s like a form of traditional welfare where people — some of whom may never have paid into the system — get government benefits because they have demonstrated financial need. Social Security isn’t that type of program, though, and in fact, its creator, Franklin Delano Roosevelt, wanted to make sure it wasn’t because he felt that making it an entitlement program would make it less likely anyone would support eliminating it. 

Your wages and earnings directly affect your Social Security benefits

Since Social Security is an earned benefit, it’s helpful to understand how it is calculated — and what you can do to maximize the income you receive from it. 

Your benefits are based on average wages over 35 years. The Social Security Administration maintains an earnings record for you. Your earnings over the years are adjusted for inflation, and your benefits are then calculated based on your 35 highest-earning years. Your benefits equal a specific percentage of your average monthly wage earned during those 35 years. Since Social Security’s benefits formula is progressive, the percentage goes down as your income goes up. There’s also a cap on the income subject to Social Security tax and used to calculate benefits. 

If you retire at your full retirement age, you will get the standard benefit owed to you based on the appropriate percentage of your average wage. Retiring earlier shrinks this benefit, and retiring later increases it. You can claim benefits as early as 62, although this could result in a significant 30% cut to benefits compared to full retirement age. You can increase benefits by waiting to claim them until age 70, which would result in up to a 24% increase to your standard benefit. 

Future retirees should be able to get the money they deserve from Social Security, based on the current benefits formula, since they have been paying into this system throughout their working lives, as the Redditor points out with his calculations. However, Social Security’s trust fund is in trouble, and automatic benefit cuts could be coming, so lawmakers will likely be forced to take some type of action to shore up the program’s finances and ensure that people who have earned this earned benefit actually receive the promised funds. 

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