Teach me Social Security and Medicare benefits calculations

I know how to find online calculators based on my past income, and I understand things may vary according to changing laws and guidelines, but does anyone know (approximately) how SS benefits are calculated?

I am not collecting anytime soon.

But let's say, for example, I had minimal income for the next 10 or 15 years, and then retired.

What is the impact on my SS benefits?

Is it like some retirement plans, calculated from the last 10 years of earnings?

Or is it based on lifetime earnings?

Or does it max after some amount, and therefore remain largely unchanged?

Similar question for Medicare... What would the impact be of 10 years worth of no income (and therefore no paid Medicare taxes) prior to age 65?

No, I am not dropping out of the workforce- this is definitely a hypothetical question!

http://www.ssa.gov/pubs/EN-05-10070.pdf

cliffs notes: (this seemed to be the paragraph that came the closest to answering your question)

Many people wonder how their benefit is figured. Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount”. This is how much you would receive at your full retirement age—65 or older, depending on your date of birth.

Medicare part B is a fixed amount deducted from your monthly payment.

whatever calculation you find, remember this when planning: you have no right to social security. any calculation you make now is not set in stone in the future.

congress can change the law without any regard to anyone at anytime, even stopping payments, and there is nothing you or anyone else can do about it under current law of social security.

so be careful when trying to plan around it, its treacherous territory.

I have to say, I'm beginning to feel that way about my military retirement.

madmallard wrote: whatever calculation you find, remember this when planning: you have no right to social security. any calculation you make now is not set in stone in the future. congress can change the law without any regard to anyone at anytime, even stopping payments, and there is nothing you or anyone else can do about it under current law of social security. so be careful when trying to plan around it, its treacherous territory.

Good word.

Not planning around it.

Yeah.
I'm 31, do not expect to see any return on my SS investment.
If I get something back, awesome... I just seriously doubt it will happen for people my age or younger.

Yep I'm basically planning for retirement without SS, we're gonna get boned sooner or later

SnowMongoose wrote: Yeah. I'm 31, do not expect to see any return on my SS investment. If I get something back, awesome... I just seriously doubt it will happen for people my age or younger.

doesn't seem right to me, but the SS folk will point out to you that what you're putting in is to pay for the people that are drawing from the system now … and that when you retire, you'll be drawing from the folk that are contributing then ..

I'm not sure that the SS retirement system will ever be done away with …

all the blood suckers in congress realize that they don't have snowballs chance in hell of getting re-elected if they do away with it …

I'm sure that something will have to be done, but I really don't think that shutting it down will ever happen … I think there is to much of a sense of self-preservation for them to do that

In reply to wbjones:

I agree with that. What I don't quite understand is the wholesale objection to raising the tax a bit to adjust for current ratio of income to payments. An additional $5 or so per paycheck wouldn't make much difference to me, but multiplied by the millions of workers who pay into it, it would make a big difference.

In reply to Ian F:

nor do I understand the resistance to raising (or doing away with) the limits on how much income is subject to FICA withholdings …

it's been explained to me, and it made sense at the time … but that sense doesn't seem to stick with me … so maybe it didn't really make as much sense as I thought

While I am not planning around it, I know an enormous number of people who have no other options. None.

I think that sucks, but it is still a reality.

The political will to keep it alive in some form or another is powerful.