How Is It Possible That My Social Security Benefit Estimate Is Higher Than The Current Maximum Rate?

Sep 13 2017 - 7:23am

I recently retired at age 60 and my Social Security Statement estimates a payment of $2862/month at FRA. How is this possible if the maximum benefit is $2687 for 2017?

Hi,

Benefit rate projections for people who haven't yet reached age 62 can only be approximated. This is because Social Security uses a process called indexing to arrive at the value given to a person's earnings in the years prior to when they reach age 62 (https://www.ssa.gov/pubs/EN-05-10070.pdf). Thus, estimates are used for people who haven't yet reached age 62.

Furthermore, the estimates on Social Security benefit statements assume that the person will continue to earn as much as they did in the most recent posted year of earnings up until the time they start drawing benefits. So, your full retirement age (FRA) estimate assumes projected earnings for the years from now until your FRA at an annual rate equal to what you earned in the most recent year posted to your earnings history. Obviously those projected earnings won't come to pass if you've retired, so the estimate shown on your record is likely overstated.

You may want to consider using the maximization software available on this website to obtain an accurate benefit estimate. The software will also permit you to compare all of your filing options so that you can determine your best strategy.

Best, Jerry