How much is social security in Kentucky?

When you retire in Kentucky, it can be difficult to determine how much Social Security benefits you will receive. However, depending on your age and how much you earned during your career, you can figure out how much benefits you qualify to get. Social Security uses a specific formula to calculate Social Security benefits.

The average Social Security retirement benefit in 2023 is $1,827, or $2,972 for a married couple, and you can earn a maximum Social Security benefit of $2,572 if you retire at 62, $3,627 if you retire at the full retirement age, or $4,555 if you delay retirement until age 70. The benefits you get depend on your earnings during your working years, your age when you start taking benefits, and the Cost-of-Living Adjustments.

How much is Social Security in Kentucky?

When you retire in Kentucky, you can start claiming Social Security benefits as early as age 62, but you will receive reduced benefits. However, if you claim benefits at the full retirement age, you will receive the full benefit from Social Security. As of 2023, the average Social Security benefit is $1,827 per month.

While retirement benefits make up the bulk of Social Security benefits, it also serves other groups like disabled workers, spouses, minor children, and surviving dependents of deceased workers. For 2023, the average Social Security disability payment is $1,483, while the average benefit for a surviving spouse is $1,704; a surviving spouse with two minors will receive an average Social Security benefit of $3,520.

How to calculate your Social Security Benefits

Social Security considers the 35-highest earning years of your working years to calculate your Social Security retirement benefits. If you worked longer than 35 years, Social Security will only consider your highest earning years and drops the low-earning years from the calculation. However, if you worked fewer than 35 years, Social Security uses zeros for the years without earnings, which may result in lower payments. Once you become eligible for benefits, any earnings before your 60^th birthday are indexed for inflation to bring the earnings at par with your current earnings.

When calculating your benefits, Social Security multiplies the first $1,115 of average indexed monthly earnings by 90%, the next $6,721 by 32%, and any earnings above $6,721 by 15%. The sum of these figures will be the amount of your initial benefit, but the payments are subject to cost-of-living adjustments to account for inflation.

What is the maximum monthly Social Security benefit in Kentucky?

The maximum monthly benefits you can receive from Social Security depend on your age when you begin taking benefits, the amount you earn in your working years, and the cost-of-living adjustments (COLA).

For 2023, the maximum initial Social Security benefit at age 62 is $2,572, and it increases to $3,279 at age 65, $4,506 at age 66, and up to $4,555 if you want until age 70. However, to get the maximum possible benefits, you must have earned the maximum taxable income every year since age 22. For 2023, the maximum taxable income is $160,200, and it is adjusted annually for inflation.

Social Security allows applicants to claim benefits as early as age 62, as long as they have earned 40 work credits, which is equivalent to 10 years of work. However, claiming benefits earlier will result in lower benefits than what you would receive at the full retirement age. You will receive the full benefits at the full retirement age, which ranges from 65 to 66. If you delay taking benefits until age 70, your benefits will increase, and you will receive a higher payout than if you claimed benefits at the full retirement age.

How much is SSI benefit in Kentucky?

Supplemental Security Income (SSI) is a federal assistance program that is designed to help aged, disabled, and blind individuals with limited income and resources. For 2023, the maximum SSI benefit is $914 for an eligible individual, $1,371 for an individual with an eligible spouse, and $458 for an essential person. The monthly benefit may be reduced by subtracting eligible monthly countable income such as VA disability benefits.

Kentucky residents who are eligible to receive the federal SSI benefit may also qualify for a state supplementation. Generally, you can use the monthly payments to pay for your basic needs like food, medical expenses, and shelter. You also get Medicaid health coverage automatically without having to make a separate application.

How is Social Security taxed in Kentucky?

Kentucky exempts all Social Security Income from state income taxes while providing deductions for other types of retirement incomes. When calculating your adjusted gross income for Kentucky income taxes, you can deduct all earnings from Social Security and Railroad Retirement Board from your total income. You will also be required to complete Schedule M, and attach the form to your Form 740 Form.

If you have other forms of retirement income like pension income, 401(k) distributions, and military income, you are exempted up to $31,110. If your total retirement income exceeds this amount, you will pay a 5% state tax rate on the excess amount above the deduction amount. If you get a job in Kentucky, you will pay state income taxes and local occupational charges on the salaries, wages, and other forms of compensation you get.

Is Kentucky Tax friendly for retirees?

Kentucky is among the most tax-friendly states for retirement, and retirees get to keep a big portion of their retirement incomes.

The state fully exempts all Social Security benefits from state income taxes, including retirement benefits, disability benefits, SSI benefits, survivor benefits, etc. If you have other retirement income other than Social Security benefits, you get a deduction of up to $31,110.

Kentucky has one of the lowest sales taxes in the United States at 6%, which is below the national sales tax average. Residents also enjoy sales tax exemption on commonly-purchased items like prescription drugs, most groceries, and prosthetic devices.

Additionally, Kentucky homeowners enjoy low property tax rates, where the effective property tax rate is $0.83%. On average, property owners can expect to pay an average of $1,257 annually in property taxes. Seniors age 65 or older also enjoy homestead exemption of up to $40,500 of their homestead’s assessed value.