Is It Too Soon to Estimate My Social Security Benefits?

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There's a good chance Social Security will wind up being a substantial income source for you in retirement, so knowing what your benefits will look like ahead of time can help you better plan for your golden years. To help in this regard, the Social Security Administration (SSA) issues annual earnings statements that not only summarize your annual income for Social Security purposes, but provide an estimate of your benefits in the future. If you're 60 or older, these come to you directly in the mail. If you're younger, you can access them online.

But just how reliable are those statements? If you're on the younger side, it may be too soon to get a solid handle on what your benefits will actually look like.

How your Social Security benefits are calculated

Your Social Security benefits are calculated based on your average indexed monthly earnings (AIME) during your 35 highest-paid years of wages. Once your AIME is established, a formula is applied that determines what your monthly retirement benefits will look like.

Now if you're in the later stages of your career, and you already have most of your working years under your belt, then it's pretty easy to arrive at a solid estimate of what your future benefits will be. But the more years you have between now and retirement, the harder it becomes to nail down that number, since your future earnings, or lack thereof, could impact the amount you ultimately get to collect.
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