This post explains how to calculate the present value of future Social Security benefits. This is important for divorcing couples, because it gives them a concrete, present value for these future benefits that allows them to determine a “fair and equitable” division of the rest of their marital assets.
While Social Security benefits cannot be divided between divorcing spouses (which makes it different from other pensions), the Massachusetts Supreme Judicial Court has ruled that it is proper to consider anticipated Social Security benefits when dividing other marital assets (Mahoney v. Mahoney 1997, pp. 446-447).
To calculate the present value of your Social Security benefits, you must first calculate what your future Social Security “monthly retirement benefit” would be if you:
a) stopped working now, but
b) waited until a normal retirement age to begin collecting.
The government has a calculator that will allow you to calculate this if you have a record of your “Taxed social security earnings” for each year that you have worked and you choose the specific calculator settings that I describe below. You can find a record of your “Taxed social security earnings” for each year that you have worked in your online “my Social Security” account.
Download instructions for Social Security Present Value calculation in .pdf
Create a “my Social Security” account
If you do not have a “my Social Security” account, you can create one by going to to https://www.ssa.gov/myaccount/ and clicking the blue button “Create an Account.” If the website can recognize your email address or phone number, you can set up the account during a single session on your computer. If the website can’t recognize your phone or email address, you will have wait for a verification code via postal mail to finish setting up your account.
Access the year-by-year history of your “Taxed Social Security Earnings”
Once you have an account, or if you already have one, you can see your taxed Social Security income, by year, up until the present. Log in to your “my Social Security” account and under the “Eligibility and Earnings Heading” click on “Review your full earnings record now”.
The columns will look like this.
You may want to take a screen shot that shows the columns “Work Year” and “Taxed Social Security Earnings” and includes ALL the years for which you have Taxed Social Security.
Alternately, you can just keep this window open while you access the Social Security Online Benefits calculator described in the next step. You will need to enter the information from this year-by-year chart into a similar chart in the Online Benefits calculator, so you can just copy and paste if you keep both windows open at the same time.
Use the Social Security Online Benefits calculator to calculate your anticipated benefits
- Once you have a record of each year’s “Taxed Social Security Earnings,” go to the SS Online Benefits calculator at:
https://www.ssa.gov/benefits/retirement/planner/AnypiaApplet.html
2) Fill in the information they request on this webpage, following these guidelines exactly:
- Age at retirement: Choose the age at which you plan to retire. The minimum age allowed is 62.
- Today’s dollars or future dollars: Choose “future (inflated) dollars”
- Annual earnings: Enter the dollar values for your “Taxed Social Security Earnings” for each year from the chart that you accessed in your “my Social Security account”. (Yes, this is laborious.)
- Earnings in 2024 (or current year): Enter the approximate amount you will have earned for the current year by the time of your separation or divorce.
- Earnings in 2025 (or next year) and later: Enter “0”. (This is important!)
3) Press the blue “Calculate Benefit”
4) Write down the number from “Your monthly retirement ” This amount is to the right of “Benefit estimates”, below the blue “Calculate Benefit” button.
- Record this “monthly retirement benefit” number and the age you entered for “Age at Retirement.”
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- You will need both of these numbers in order to calculate a Present Value of your future monthly benefits (see below.)
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- Maybe take a screenshot or other easy-to-find record of the chart showing your year-by-year Taxed Social Security Earnings.
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- You will need to know the years for which you have Taxed Social Security in order to calculate a marital coverture ratio (i.e., to calculate how many of these years were during your marriage)
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Use an Online Present Value Calculator or Hire an Actuary to Calculate the Present Value of the anticipated monthly benefit
You can use an instant present value calculator at https:/valueyourpension.com ($50) to calculate the present value of your future stream of social security benefits, or you can contact an actuary or pension analyst, who will charge $175+, may be unfamiliar with working with Social Security benefits, and will probably take a few weeks to get back to you with the present value calculation.