Ever since reading this thread over in then journals I’ve been trying to wrap my head around Social Security Bend points.
http://forum.mrmoneymustache.com/journals/wrestling-with-safety-margins/msg688743/#msg688743Is calculating Bend Points something that should be on the preFIRE to do list (I’d never even heard of it before)? I took a look at the referenced spreadsheet but I’m having a hard time grasping the value if the Bend Point dollar values for say the year 2041 are unknown at this time (2015 below). Is the 2nd Bend point a hurdle you should really clear or just a line in the sand that indicates reduced benefit beyond?
I’m certain after 24 years of working I’d cleared the first bend (a) but I could be on the cusp for the 2nd (b) but having a hard time understanding how much it matters to cross the line into (c). I wasn’t really counting on SS for FIRE in the first place but I also don’t like the idea that I may miss out on getting some of my money back because I didn’t understand the math and pulled the trigger too early.
PIA formula (from
http://www.socialsecurity.gov/OACT/COLA/piaformula.html)
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2015, or who dies in 2015 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $826 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $826 and through $4,980, plus
(c) 15 percent of his/her average indexed monthly earnings over $4,980.