Cracking the Code on Social Security Benefits

If you’re like most working people, you’ve probably received a statement in the mail from the Social Security Administration listing your potential future benefits. Trying to figure out how Social Security arrived at those mysterious figures requires some detective work. Here, Gail Buckner, CFP, our personal retirement and financial planning strategist, attempts to crack the code. She discusses how your benefit is calculated and offers some strategies on how to maximize it.

Gail Buckner, CFP®
Vice President
Personal Retirement and Financial Planning Strategist
Franklin Templeton Investments

One of the greatest mysteries of Social Security can be summed up in one question: “How much?”

As in, “How much is my benefit going to be?”

A corollary to this: “How is it calculated?”

And another common question: “How much will my spouse/ex-spouse/child/etc., get?”

You will find a wealth of information about “How much?” on Social Security’s website.

Unfortunately, you often have to switch from one page to another, the math can be a bit complicated and the explanations still include too much jargon that dates back to when the system was set up. In other words, it can sound like actuary-speak from the 1940s. As with many government entities, there are also tons of acronyms—PIA, WEP, GPO and OASDI to name just a few. (I’ll let you look those up, if you’re interested.)

What follows is a primer—in 21st century lingo—explaining the most common question: “How much?”