Switching to a job that doesn't have Social Security

[Roamer]

I am thinking of switching to a job that is state supported, and they do not put into social security.  Instead they have a 401A.  I am trying to find out what this would do to my social security withdrawl amount when I retire. I am 57, so full benefits in 10 years from SS would be $2587 a month according to the SS website. But they are assuming I will keep making 85K a year until I retire.  I don't see any calculators that show what my SS would be if I stopped contributing now and waited 10 years to start my benefits.  Any insight to 401A vs continued contribution to SS are welcome.  (Switching jobs vs not switching jobs)

[Anon-E-Mouze]

I'm not an expert on this, but I think that you should try the Windfall Elimination Provision (WEP) Online Calculator
https://www.ssa.gov/benefits/retirement/planner/anyPiaWepjs04.html

First, you can fill in zero for the section that says Earnings in 2022 and later covered by Social Security, and it assume no further earnings from 2022 until you retire.

But, I also think you might need to consider the possibility that the state pension you get will reduce your Social Security pension due to the Windfall Elimination rules. (Of course, you won't know now what that pension amount will be but you can play with a few numbers.) I believe that any pension you get from an employer that doesn't contribute to social security will reduce your social security pension (by 50% of the monthly amount of that non-covered pension). For example, if you end up getting $250 a month from your state employer's pension, your social security pension will be reduced by $125 per month.

[terran]

There are some more complicated calculation options for more complicated situations, but for the simple one of changing expected social security earnings from now until when you claim social security to something other than what you earned last year (including changing to $0 future earnings) you can just create an account at https://secure.ssa.gov/RIL/, go to the "Plan For Retirement" box, click the "Average Future Annual Salary" section and change the estimate to whatever you want.

Another thing to keep in mind is that once you've had a certain number of years (5 I think?) without social security reportable wages you'll no longer be eligible for Social Security Disability Income (SSDI), so you should make sure you familiarize yourself with the disability insurance offered by your potential employer to make sure you're comfortable with it and/or plan to buy outside coverage.

[ender]

I am thinking of switching to a job that is state supported, and they do not put into social security.  Instead they have a 401A.  I am trying to find out what this would do to my social security withdrawl amount when I retire. I am 57, so full benefits in 10 years from SS would be $2587 a month according to the SS website. But they are assuming I will keep making 85K a year until I retire.  I don't see any calculators that show what my SS would be if I stopped contributing now and waited 10 years to start my benefits.  Any insight to 401A vs continued contribution to SS are welcome.  (Switching jobs vs not switching jobs)

ssa.gov lets you do this on their site - calculating SS based on average income until retirement date (just put $0 in your case).

[Roamer]

Thanks for the replies.  I was looking on the SSA site all morning and didn't see their calculator options.

[terran]

Thanks for the replies.  I was looking on the SSA site all morning and didn't see their calculator options.

Yeah, you kind of need to know to click on it to realize some of the fields can be edited.

[Cassie]

It’s complicated. WEP can be a huge cut in your SS unless you have 20 or 30 years of SS wages at what they consider substantial income for each year. They define what that number is for each year. You can look at what you earned for each year versus the number required.  If you have 20 years of substantial income they cut less of your SS. At 30 years they don’t cut at all.

[ericrugiero]

I am thinking of switching to a job that is state supported, and they do not put into social security.  Instead they have a 401A.  I am trying to find out what this would do to my social security withdrawl amount when I retire. I am 57, so full benefits in 10 years from SS would be $2587 a month according to the SS website. But they are assuming I will keep making 85K a year until I retire.  I don't see any calculators that show what my SS would be if I stopped contributing now and waited 10 years to start my benefits.  Any insight to 401A vs continued contribution to SS are welcome.  (Switching jobs vs not switching jobs)

If you are 57 and have been contributing to SS since you started work, you probably have 30+ years of contributions.  So, continuing to work will just replace a lower earning year with a higher earning year (SS looks at you highest 30 earning years).  Those earnings are weighted for inflation (so $40K 20 years ago  would be worth much more than $40K today in the calculations).  Also, SS has two bend points where earning additional money has a smaller percentage impact on your benefits.  You are almost certainly above the point where the benefit switches from 90% of earnings to  32% and could possibly be above the 15% bend point.  https://www.ssa.gov/OACT/COLA/piaformula.html  SS is really only a good deal until you contribute enough to reach the first bend point.  Beyond that, it's are terrible investment.  TLDR:  if you have over 30 years of contributing to SS, stopping the contributions now will probably have minimal effect and the 401A is probably more beneficial.   

I'm not very familiar with the windfall elimination provision.  I don't think the 401A would impact this but a government pension likely would.  You should check into that more because it could have a much more negative impact.  If the WEP isn't a concern, I would guess you are much better off with additional money in a 401A than you would be with more years contributing to SS. 

[Cassie]

WEP is a huge concern because all of your 30 years won’t necessarily count if you didn’t make what they consider substantial income for everyone of those years. I had many years that didn’t count. At your age you could majorly harm yourself. In order to make a informed decision you need to compare the income for every year you worked to the chart SS has for what is considered substantial earnings.

[ericrugiero]

I was curious so I looked up some more info.  Here is an informative link. 

https://www.ssa.gov/benefits/retirement/planner/wep.html

Substantial earnings 30 years ago (1991) was $10,000 and that steadily ramps up to $26,000 in 2021.  If you earned more than that over all 30 years WEP isn't a concern.  If not, you should research more. 

[Chris Pascale]

Would you advise anyone against this? If so, under what circumstances?

[Roamer]

Thanks for all the tips. New job offered about a 20% raise so I am taking it.  Hope to work 5 years  (or less)!