Social Security Value Calculator

What it calculates

1) Social Security contributions (OASDI)

Social Security is primarily funded through payroll taxes under OASDI. Each year has a maximum amount of earnings subject to the Social Security portion of payroll tax, commonly called the wage base or wage cap. This calculator caps each year’s taxable wages at that historical wage base.

It then applies historical OASDI tax rates. The employee rate is not always 6.2% across all years, and the employee and employer rates can differ in certain years. The calculator also accounts for the temporary employee-rate reduction in 2011 and 2012.

2) Estimated Social Security benefit at age 67

Social Security retirement benefits are based on your highest wage-indexed earnings. This page’s calculator estimates a monthly benefit at age 67 from your work history and wage caps. It is intended to be directionally useful, not an official benefit statement.

3) Investing comparison

For the comparison, the calculator assumes the combined employee and employer OASDI amounts are invested instead. It models monthly contributions and monthly compounding using an annual-equivalent 10% return, then simulates retirement withdrawals.

Benefit estimate method

The calculator implements a simplified version of the Social Security benefit formula:

1. Cap earnings by year: each year’s earnings are limited to the Social Security wage base for that year.
2. Wage indexing: earnings before the year you turn 60 are indexed using the Average Wage Index to put earlier wages on a comparable scale.
3. Top 35 years: it selects the highest 35 indexed years (or fewer years if you worked less).
4. AIME: it computes Average Indexed Monthly Earnings by dividing the top-35 total by 420 months, then rounds down to the next lower whole dollar.
5. PIA bend points: it applies the Primary Insurance Amount formula using bend points for the year you turn 62 (your year of eligibility).
6. COLA when available: it applies listed COLAs from eligibility toward age 67 when those COLA values are present in the embedded table.

If you want an official estimate, compare results against your SSA online account and SSA calculators. This tool is designed for understanding mechanics and trade-offs.

Investing comparison method

Monthly investing model

During working years, the calculator invests the combined employee and employer OASDI contributions. It converts each year’s total contribution into equal monthly deposits and compounds monthly at an annual-equivalent 10% return.

Retirement withdrawals

After the last working year, the model withdraws a monthly amount equal to the estimated Social Security monthly benefit at age 67 and continues compounding the remaining balance. It runs withdrawals over a retirement duration based on average remaining life expectancy.

This section is illustrative only. Real-world markets vary, and sustainable retirement withdrawals depend on volatility, inflation, and timing.

Important limitations

• The calculator focuses on OASDI only and does not include Medicare payroll taxes.
• Benefits are simplified. It does not model exact month-based claiming rules, family benefits (spousal or survivor), disability coverage, earnings tests, WEP/GPO, taxation of benefits, or Medicare premiums.
• COLA handling is limited to the years included in the embedded COLA table.
• The investment comparison assumes a constant return and does not model inflation explicitly, sequence-of-returns risk, fees, taxes, or behavioral factors.
• Social Security is insurance with features private investing does not replicate. This tool is not a recommendation to opt out or a forecast of your future benefit.

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