If I Make $40,000, How Much Will Social Security Pay Me?
Social Security is designed to help retirees replace a portion their work income, and the lower your average salary has been during your career, the greater the percentage of your salary Social Security will replace. $40,000 a year is above the median per-person income in the U.S. and is a good salary in many parts of the country, but it's less than what the typical household brings in every year. Below, you'll learn more about what someone making $40,000 can expect from Social Security and why it still makes sense to take action to supplement your Social Security with retirement savings of your own.
Those who make $40,000 pay taxes on all of their income into the Social Security system. It takes more than three times that amount to max out your Social Security payroll taxes. The current tax rate is 6.2%, so you can expect to see $2,480 go directly from your paycheck toward Social Security. Your employer will pay another $2,480 on your behalf.
All of your $40,000 salary goes into the calculations for determining how much your monthly Social Security checks will be after you retire. $40,000 is also enough to give you the maximum of four Social Security work credits for the year, getting you closer to the 40 credits you need throughout your career to qualify for retirement benefits. You might also need those credits if you have to claim Social Security disability benefits.
Source: Fool.com
