The Money Mustache Community
General Discussion => Post-FIRE => Topic started by: mboley on January 22, 2023, 06:40:00 PM
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I retired in 2015 at age 55 with just 30 years of full time wages going into my benefits calculation. Because of that I knew my benefits would be average.
Fast forward, I recently found a 2016 statement which put my benefit at 66+10mo at $2269. I had read about the big COLA adjustment for this year so I decided to check on my current benefit level.
To my surprise, I'm now at $3075 !!! That's a 35% increase, WOW! I had no idea of the affect of COLA adjustments.
Anyone else checked their benefits lately?
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FYI, your 2016 number is only a little under the 2023 average. Your projected benefit is about halfway between average and the maximum. Don't know where you got the idea it was average.
Also, remember that this actually two consecutive years of a relatively high COLA, in addition to lower COLAs in the previous years. COLAs are compounding.
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I check my finances at least annually.
The # of years for your SS calculation is always (as far as I know) 30 yrs. It's the average of the amounts of your top 30 years (reported) that determine your SS amount.
COLAs have NOT been usually so pleasantly surprising. It's based on inflation of the economy.
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The # of years for your SS calculation is always (as far as I know) 30 yrs. It's the average of the amounts of your top 30 years (reported) that determine your SS amount.
It's 35 years of earnings, not 30.
https://www.ssa.gov/OACT/ProgData/retirebenefit1.html
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
Sent from my SM-A205U using Tapatalk
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
Sent from my SM-A205U using Tapatalk
For those in high paying fields, it only takes about 17 years of maximum contribution to reach the second bend point. After that, additional years don't have as big of an effect.
And for some in public service, there will be no SS.
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
Sent from my SM-A205U using Tapatalk
For those in high paying fields, it only takes about 17 years of maximum contribution to reach the second bend point. After that, additional years don't have as big of an effect.
And for some in public service, there will be no SS.
This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
Sent from my SM-A205U using Tapatalk
For those in high paying fields, it only takes about 17 years of maximum contribution to reach the second bend point. After that, additional years don't have as big of an effect.
And for some in public service, there will be no SS.
This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
Yeah, it was crazy to do the math and realize where the second bend point was around half of the maximum contribution for 35 years. Still agree with Bernie that we should do away with the maximum. Maybe even add a third bend point or cap the benefits based on the current max (with the appropriate adjustments for inflation).
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
Sent from my SM-A205U using Tapatalk
I FIREd when I was 33. Had 17 years of SS earnings including high school and college. Maxed out SS earnings for 10 of those years as an adult. My projected benefit at full retirement age is still over $2,000 per month. It adds up quick when the earnings are maxed out.
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I retired at 36, and only had 16 years where I earned money, the lowest being $1700 in a year. But I got in my 40 quarters, no way was I gonna stick around to get money I don't need later in life. I also never made enough to hit anywhere near any caps, neither did DH.
If I take the money on time, ssa.gov calculator has me at a little over $1500/month. It puts me from 95% success to 97% success in my simulations.... Woo hoo!
I'm really glad they updated their calculator so you can add in zeros for future earnings instead of assuming steady employment until retirement. Much or helpful for all kinds of people that need to make decisions.
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SS is so far away, it's hard to get excited about it. Definitely don't depend on it. Whatever amount it turns out to be will be a gift if/when it comes.
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I'm really glad they updated their calculator so you can add in zeros for future earnings instead of assuming steady employment until retirement. Much or helpful for all kinds of people that need to make decisions.
That feature is great, but what would make it better is if you could add an amount of time (like 3 years) and then put zero as I plan on working no more than 3 more years. I guess putting zero now gives me a ballpark number.
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I'm really glad they updated their calculator so you can add in zeros for future earnings instead of assuming steady employment until retirement. Much or helpful for all kinds of people that need to make decisions.
That feature is great, but what would make it better is if you could add an amount of time (like 3 years) and then put zero as I plan on working no more than 3 more years. I guess putting zero now gives me a ballpark number.
Have you tried SSA tools? Pretty sure you can manipulate that there. Great site.
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I'm really glad they updated their calculator so you can add in zeros for future earnings instead of assuming steady employment until retirement. Much or helpful for all kinds of people that need to make decisions.
That feature is great, but what would make it better is if you could add an amount of time (like 3 years) and then put zero as I plan on working no more than 3 more years. I guess putting zero now gives me a ballpark number.
Have you tried SSA tools? Pretty sure you can manipulate that there. Great site.
I tried putting in the average of the additional years plus 0 for each year between FIRE and 62, and then setting the retirement date to 62. That showed another couple hundred a month at 70 vs if I put 0.
I'm currently at Coast Fire, still work from home for now. I expect to have somewhere between 2-6 more non-zero years for SSA.
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Thanks for suggesting the tools. I had forgotten that was something I could play with. very enlightening.
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FYI...looks like SS updated estimated earnings to include 2022 income in the last few days.
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Thanks, @SpareChange !
I've been using https://ssa.tools/calculator.html along with https://opensocialsecurity.com/ for SS modeling.
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Thanks, @SpareChange !
I've been using https://ssa.tools/calculator.html along with https://opensocialsecurity.com/ for SS modeling.
Sure. And yep, those two are the ones I use as well:). Every Feb I do my taxes and check my new SS benefit/earnings record.
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I'm really glad they updated their calculator so you can add in zeros for future earnings instead of assuming steady employment until retirement. Much or helpful for all kinds of people that need to make decisions.
That feature is great, but what would make it better is if you could add an amount of time (like 3 years) and then put zero as I plan on working no more than 3 more years. I guess putting zero now gives me a ballpark number.
Have you tried SSA tools? Pretty sure you can manipulate that there. Great site.
I had no idea about SSA tools. It’s exactly what I am needing. It’s fantastic! Thanks for mentioning it.
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
Sent from my SM-A205U using Tapatalk
What do you mean by the statement, "having 15 years of zero SS earnings will affect their benefits dramatically"?
Having 15 years of zero SS earnings doesn't have any impact on your benefits as long as you entered your information into the SSA tools correctly. Just put zeros into the excellent calculator they have for future earnings.
In addition, as people have already mentioned as you hit the bend points additional income increases your SS benefits significantly less than prior earnings. I FIREd at 42 around the time I hit the 2nd bendpoint, so an extra 15 years of work would have been at the lowest benefit increase rate. You earliest earnings do a lot to increase your benefits until you hit the first bendpoint, then the increase your benefits more slowly until the second bendpoint, and after that second bendpoint it takes years of work to get a small increase in benefits. My partner and I FIREd just before hitting the second bendpoint, so according to current forecasts at age 67 we should get about $32k/year (each). When I put a few years of $100k income into the calculator the benefits increase really slowly.
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This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
There are a couple of things working another 7 years does besides the minor increase in SS you lament. You have 7 additional years of savings and you have 7 additional years of compound interest on your nest egg. With just a little stock market luck, that will more than double your nest egg.
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
I have all 40 credits to receive SS but I have a questions about what you posted. How do you know how many years you have for the "years of earning"? Specifically, what about those years that SS combines income because (ostensibly) you didn't make enough in one year. Is the low earning year ever considered one year (in the 35 year calculation) or are the combined years (as they are shown in the earnings record table on your SS statement) equal to one year? For instance, many of us probably have HS work that was not full time, but we still paid a bit into SS. If SS combines all 4 years of high school in the earnings record table (eg 2009-2013 total earning 58K) does that indicate that whole time period from 2009-2013 is equal to 1 year of work? or 4? That seems reasonable, but I have another weird time span of four years where my salaries equaled 148k (37k each year) but SS combined all 4 years into one on the earnings record table. It seems like 37k should be enough to equal a year of earning, but IDK. It's so confusing.
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
I have all 40 credits to receive SS but I have a questions about what you posted. How do you know how many years you have for the "years of earning"? Specifically, what about those years that SS combines income because (ostensibly) you didn't make enough in one year. Is the low earning year ever considered one year (in the 35 year calculation) or are the combined years (as they are shown in the earnings record table on your SS statement) equal to one year? For instance, many of us probably have HS work that was not full time, but we still paid a bit into SS. If SS combines all 4 years of high school in the earnings record table (eg 2009-2013 total earning 58K) does that indicate that whole time period from 2009-2013 is equal to 1 year of work? or 4? That seems reasonable, but I have another weird time span of four years where my salaries equaled 148k (37k each year) but SS combined all 4 years into one on the earnings record table. It seems like 37k should be enough to equal a year of earning, but IDK. It's so confusing.
I've never seen SS combine multiple years of earnings into one. AFAIK, each calendar year is one year of earning, and your benefit is based on your inflation-adjusted highest 35 years. So all your talk of "combining years" is something I've never heard of nor seen.
SS does keep track of "credits" which are used to determine whether you're eligible for any SS benefit at all. Credits are different from years, but credits do not determine the amount of your benefit, just whether or not you get one at all. You might read this and see if it answers some of your questions: https://www.ssa.gov/benefits/retirement/planner/credits.html
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
If I maxed out my income to the social security maximum for the next 20+ years I would increase my benefits by right about 23% from $2969 to $3654. Meh. Past the second bend point each extra year of work adds at most something like $700/year in SS payout, which is kind of pocket change. So past the second bend point work longer for your portfolio, not to game social security.
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
That statement is misleading, years with no benefits only "affect" your benefit because your benefits don't increase. The reason (I think) it says that, is that S.S. benefits are calculated based on AIME - Average Indexed Monthly Earnings. The top 35 years count towards AIME. If you have any years with zeros, the average will of course go down. But if you take two people with equal AIME values, not matter how many zeros one has their benefits will be exactly the same (assuming they both have the minimum of 40 credits). The only thing, after gaining eligibility, is AIME - not the values (zero or otherwise) that go into the AIME calculation.
For example, assume two different people - one lower and one higher wage earner. If one earns and inflation adjusted $50k / year for 34 years and the other earns $100k / year for 17 years and $0 for 17 years, their average is exactly the same. I ran the data on the SSA calculator to verify that this is correct, and it spit out the exact same benefit amounts.
So no, zeros do not in any way reduce your benefit - you can easily verify this by either looking at the way the calculation is done or by using the calculator. Zeros in your top 35 just mean that your benefits do not increase due to no earnings those years. I can post the data I entered into the tool if anyone wants me to, but it's pretty simple to do it yourself to verify that what I wrote is correct.
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
I have all 40 credits to receive SS but I have a questions about what you posted. How do you know how many years you have for the "years of earning"? Specifically, what about those years that SS combines income because (ostensibly) you didn't make enough in one year. Is the low earning year ever considered one year (in the 35 year calculation) or are the combined years (as they are shown in the earnings record table on your SS statement) equal to one year? For instance, many of us probably have HS work that was not full time, but we still paid a bit into SS. If SS combines all 4 years of high school in the earnings record table (eg 2009-2013 total earning 58K) does that indicate that whole time period from 2009-2013 is equal to 1 year of work? or 4? That seems reasonable, but I have another weird time span of four years where my salaries equaled 148k (37k each year) but SS combined all 4 years into one on the earnings record table. It seems like 37k should be enough to equal a year of earning, but IDK. It's so confusing.
I've never seen SS combine multiple years of earnings into one. AFAIK, each calendar year is one year of earning, and your benefit is based on your inflation-adjusted highest 35 years. So all your talk of "combining years" is something I've never heard of nor seen.
SS does keep track of "credits" which are used to determine whether you're eligible for any SS benefit at all. Credits are different from years, but credits do not determine the amount of your benefit, just whether or not you get one at all. You might read this and see if it answers some of your questions: https://www.ssa.gov/benefits/retirement/planner/credits.html
Thank you for the link,, I have all 40 credits to be eligible. I am referring to the earnings record table that is on your SS statement. The one with the three columns with these headings
1. Work Year
2. Earnings Taxed for Social Security
3. Earnings Taxed for Medicare (began 1966)
below each column are 20 rows (each indicating the year you worked, earnings taxed for SS, and taxed for medicare). I have three instances where they combined years. I also have one year with earnings 0 where they let it stand as its own row. Maybe they only set aside 20 rows regardless of how many years you've worked?
What calculator are you using?
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
@MustacheAndaHalf , I realized we may be talking past each other, and I'm not sure my previous post helped so I wanted to try to be more clear because I think this is very important. Hopefully this post will make my position more clear so we can see if there really is a disagreement.
What I mean when I say that years of $0 earnings do NOT decrease benefits is the following:
Assuming a person has the required 40 credits and meets whatever (if any) qualifying criteria, the benefits they have earned can never decrease regardless of future earnings or lack thereof. For instance, if someone earns an inflation adjusted average of $100k for 10 years, they have earned a specific dollar amount when they qualify. They could go to the calculator and see exactly what that benefit is. If they never work again, their benefit will be the amount they earned and the $0 years will not cause their earned benefit to be docked or reduced in any way. Of course if they work more, their benefit will go up by the amount specified by the formula. But a benefit will not decrease due to a year of no earnings. This cannot happen (I'm ignoring cases where someone isn't eligible or does something illegal that might make them not qualify).
A way to think about it mathematically is to count each year as (Indexed earnings / 35). If you earn an indexed amount of $35k in one year, you've added $1,000 to your AIME. No zeros can ever decrease that. If you earn $70k in a year, that adds $2k to your AIME.
If someone earns $0 in any given year, their benefit *will* be lower than if they worked that year and paid more in to S.S (assuming that year is in their top 35). If by your statement that years with zero earnings will decrease your benefit you mean that if you earn more than zero your S.S. benefit will increase - I agree with that. I do not consider the lack of increase due to not working a decrease of any kind - it's just a lack of increase.
Hopefully that clarifies the point I was trying to make. I don't want anyone to come away from this and think that if they FIRE their benefits will decrease somehow - they will not, they just won't grow any more as they would if they kept working. And as has been pointed out, once you reach the second bendpoint any extra earnings do very little for your S.S. benefits.
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
I have all 40 credits to receive SS but I have a questions about what you posted. How do you know how many years you have for the "years of earning"? Specifically, what about those years that SS combines income because (ostensibly) you didn't make enough in one year. Is the low earning year ever considered one year (in the 35 year calculation) or are the combined years (as they are shown in the earnings record table on your SS statement) equal to one year? For instance, many of us probably have HS work that was not full time, but we still paid a bit into SS. If SS combines all 4 years of high school in the earnings record table (eg 2009-2013 total earning 58K) does that indicate that whole time period from 2009-2013 is equal to 1 year of work? or 4? That seems reasonable, but I have another weird time span of four years where my salaries equaled 148k (37k each year) but SS combined all 4 years into one on the earnings record table. It seems like 37k should be enough to equal a year of earning, but IDK. It's so confusing.
I've never seen SS combine multiple years of earnings into one. AFAIK, each calendar year is one year of earning, and your benefit is based on your inflation-adjusted highest 35 years. So all your talk of "combining years" is something I've never heard of nor seen.
SS does keep track of "credits" which are used to determine whether you're eligible for any SS benefit at all. Credits are different from years, but credits do not determine the amount of your benefit, just whether or not you get one at all. You might read this and see if it answers some of your questions: https://www.ssa.gov/benefits/retirement/planner/credits.html
Thank you for the link,, I have all 40 credits to be eligible. I am referring to the earnings record table that is on your SS statement. The one with the three columns with these headings
1. Work Year
2. Earnings Taxed for Social Security
3. Earnings Taxed for Medicare (began 1966)
below each column are 20 rows (each indicating the year you worked, earnings taxed for SS, and taxed for medicare). I have three instances where they combined years. I also have one year with earnings 0 where they let it stand as its own row. Maybe they only set aside 20 rows regardless of how many years you've worked?
What calculator are you using?
I'm not using a calculator. I was referring to the way my SS statement looked years ago. Honestly, I hadn't taken a look at an actual SS statement for years. But based on your reply I went and looked at mine just now.
And I see what you see. The first three rows of mine are for the 1980s, the 1990s, and 2001 - 2005. The remaining 17 rows are for 2006 through 2022.
I'm about 99.9% certain that SS is just doing that to make the table fit on the printout. I don't think they're actually combining years when calculating your (or my) SS benefit.
In fact, right above that table, in the text, it says:
" We have combined your earlier years of earnings below, but you can view your complete earnings record online with my Social Security. If you find an error, view your full earnings record online and call 1-800-772-1213."
I can see my full earnings record by each specific year if I go to: https://secure.ssa.gov/ec2/eligibility-earnings-ui/earnings-record when logged into my SSA account.
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A few people seem to believe that working less than 35 years does not matter to social security benefits. That is not accurate - those years with zero earnings reduce your benefits:
If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
I have all 40 credits to receive SS but I have a questions about what you posted. How do you know how many years you have for the "years of earning"? Specifically, what about those years that SS combines income because (ostensibly) you didn't make enough in one year. Is the low earning year ever considered one year (in the 35 year calculation) or are the combined years (as they are shown in the earnings record table on your SS statement) equal to one year? For instance, many of us probably have HS work that was not full time, but we still paid a bit into SS. If SS combines all 4 years of high school in the earnings record table (eg 2009-2013 total earning 58K) does that indicate that whole time period from 2009-2013 is equal to 1 year of work? or 4? That seems reasonable, but I have another weird time span of four years where my salaries equaled 148k (37k each year) but SS combined all 4 years into one on the earnings record table. It seems like 37k should be enough to equal a year of earning, but IDK. It's so confusing.
I've never seen SS combine multiple years of earnings into one. AFAIK, each calendar year is one year of earning, and your benefit is based on your inflation-adjusted highest 35 years. So all your talk of "combining years" is something I've never heard of nor seen.
SS does keep track of "credits" which are used to determine whether you're eligible for any SS benefit at all. Credits are different from years, but credits do not determine the amount of your benefit, just whether or not you get one at all. You might read this and see if it answers some of your questions: https://www.ssa.gov/benefits/retirement/planner/credits.html
Thank you for the link,, I have all 40 credits to be eligible. I am referring to the earnings record table that is on your SS statement. The one with the three columns with these headings
1. Work Year
2. Earnings Taxed for Social Security
3. Earnings Taxed for Medicare (began 1966)
below each column are 20 rows (each indicating the year you worked, earnings taxed for SS, and taxed for medicare). I have three instances where they combined years. I also have one year with earnings 0 where they let it stand as its own row. Maybe they only set aside 20 rows regardless of how many years you've worked?
What calculator are you using?
I'm not using a calculator. I was referring to the way my SS statement looked years ago. Honestly, I hadn't taken a look at an actual SS statement for years. But based on your reply I went and looked at mine just now.
And I see what you see. The first three rows of mine are for the 1980s, the 1990s, and 2001 - 2005. The remaining 17 rows are for 2006 through 2022.
I'm about 99.9% certain that SS is just doing that to make the table fit on the printout. I don't think they're actually combining years when calculating your (or my) SS benefit.
In fact, right above that table, in the text, it says:
" We have combined your earlier years of earnings below, but you can view your complete earnings record online with my Social Security. If you find an error, view your full earnings record online and call 1-800-772-1213."
I can see my full earnings record by each specific year if I go to: https://secure.ssa.gov/ec2/eligibility-earnings-ui/earnings-record when logged into my SSA account.
Okay, yes that is correct. My full earning record is not on my statement. This makes way more sense and it is really helpful! So once I have 35 years of work any larger earning years will replace lower earning years? Regardless of whether you know the answer I really appreciate your efforts in answering my questions already. cheers
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Everyone here is aware that SS isn't fully funded beyond 2037 right?
https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html#:~:text=As%20a%20result%20of%20changes,are%20projected%20to%20become%20exhausted.
As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.
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Okay, yes that is correct. My full earning record is not on my statement. This makes way more sense and it is really helpful! So once I have 35 years of work any larger earning years will replace lower earning years? Regardless of whether you know the answer I really appreciate your efforts in answering my questions already. cheers
Correct. However, for the purposes of "higher"/"lower", your wages are inflation adjusted. It is not just the raw dollar amount. So for example, if you earned $20,000 in 2022, that might not replace $11,000 earned in 1985 or something like that.
Also, as other people have pointed out, there are things called bend points, where your SS benefits don't go up by as much as they do when you start accumulating earnings. For example, I only have about 25 years of SS earnings, but those 10 zeros don't hurt me much because of the way bend points work. The key takeaway is to look at your SS benefits regularly compared to how much you're paying in. You should be able to tell when you hit those bend points, because the rate of increase in your SS benefits will drop off.
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This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
There are a couple of things working another 7 years does besides the minor increase in SS you lament. You have 7 additional years of savings and you have 7 additional years of compound interest on your nest egg. With just a little stock market luck, that will more than double your nest egg.
Wow who knew working seven more years would earn me loads of money? Screw OMY, I'm 7MY guys!
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...
Years with no earnings reduces your retirement benefit amount.
https://www.ssa.gov/benefits/retirement/planner/stopwork.html
What I mean when I say that years of $0 earnings do NOT decrease benefits is the following:
... If by your statement that years with zero earnings will decrease your benefit you mean that if you earn more than zero your S.S. benefit will increase - I agree with that. I do not consider the lack of increase due to not working a decrease of any kind - it's just a lack of increase.
Years ago there was a penalty for having zero years - an additional penalty, not the decrease from having a zero. I assume that is the meaning behind the social security website quote I gave above (ssa.gov).
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This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
There are a couple of things working another 7 years does besides the minor increase in SS you lament. You have 7 additional years of savings and you have 7 additional years of compound interest on your nest egg. With just a little stock market luck, that will more than double your nest egg.
Wow who knew working seven more years would earn me loads of money? Screw OMY, I'm 7MY guys!
You posted, "The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so
why would I."
My answer added there is more than just the SS in the equation. If you have enough, then you quit work when you want.
No need to be snarky.
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Everyone here is aware that SS isn't fully funded beyond 2037 right?
https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html#:~:text=As%20a%20result%20of%20changes,are%20projected%20to%20become%20exhausted.
I'm not sure how much has changed in 13 years, but that paper was written in 2010. Covid may have altered the estimates.
This more recent '2022 OASDI Trustees Report' says, "Projected year of trust fund reserve depletion--2034.
But there is a lot in the report that I haven't read.
https://www.ssa.gov/OACT/tr/2022/II_D_project.html#105057
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Everyone here is aware that SS isn't fully funded beyond 2037 right?
https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html#:~:text=As%20a%20result%20of%20changes,are%20projected%20to%20become%20exhausted.
Yep. And, the real question is what changes will happen to keep it funded beyond that point. Here's a great tool for seeing what might be done https://www.crfb.org/socialsecurityreformer/. My guess is that after the can has been kicked down the road for so long that action can no longer be avoided, the most politically viable options are raising (or eliminating) the cap on earnings subject to payroll taxes, and indexing retirement age to life expectancy.
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I haven't checked my social security statement in ages - but this thread made me look and I noticed something new.
I have about 10 really low earning years when I was a teen and in college that now seem to be grouped into 2 years of full time minimum wage income - effectively taking me down from almost 30 years of work to 19 years. I swear this is new.
I remember when I looked several years ago that I had lots of 3-7k years from high school and undergrad. Now I have 1991-2000 and 2000-2005 and then annual wages from 2006 onwards.
I wonder if that is just how they list it or how they count it? And if it is how they count it, will just wash out or will it hurt me because now I'll have more zero years when I cut the cord?
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Okay, yes that is correct. My full earning record is not on my statement. This makes way more sense and it is really helpful! So once I have 35 years of work any larger earning years will replace lower earning years? Regardless of whether you know the answer I really appreciate your efforts in answering my questions already. cheers
Correct. However, for the purposes of "higher"/"lower", your wages are inflation adjusted. It is not just the raw dollar amount. So for example, if you earned $20,000 in 2022, that might not replace $11,000 earned in 1985 or something like that.
Also, as other people have pointed out, there are things called bend points, where your SS benefits don't go up by as much as they do when you start accumulating earnings. For example, I only have about 25 years of SS earnings, but those 10 zeros don't hurt me much because of the way bend points work. The key takeaway is to look at your SS benefits regularly compared to how much you're paying in. You should be able to tell when you hit those bend points, because the rate of increase in your SS benefits will drop off.
Thanks so much, I've been trying to figure out how to see the bend points. I started working when I was 14.5 so I've got a bunch of low years.
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Mostly PTF
I haven't looked at mine in a long time and it's good information to have. I've been calculating everything without SS included as I was unsure of long-term solvency, but I anticipate that there will be enough of an uproar as 2034 draws near to result in legislation that will somehow correct the issues plaguing the program
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I wonder if that is just how they list it or how they count it? And if it is how they count it, will just wash out or will it hurt me because now I'll have more zero years when I cut the cord?
Read my posts in this thread for your answers.
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Buy the book: "Social Security Made Simple" by Mike Piper - $5 on Amazon for the Kindle version. Everyone on the BH forums agree that this is the best outline of the program.
In terms of the bend points, when I calculate my PIA amount a couple of years ago, here's how it worked at Full Retirement Age of 67:
PIA formula
Bend Point One: AIME below $856 = 90% x amount
Bend Point Two: AIME over $856 and below $5,157 = 32% x amount
Bend Point Three: AIME over $5,157 = 15% x amount
So if your Average Income Monthly Earning over the 35 years was $6000, your PIA would be:
$856 x .90 =$770.40
($5,517-$856) x .32 = $1491.52
($6,000-5,517) x .15 = $72.45
Total PIA: $2,334.37
So you can see getting to the second bend point is where most of the income is calculated.
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I wonder if that is just how they list it or how they count it? And if it is how they count it, will just wash out or will it hurt me because now I'll have more zero years when I cut the cord?
Read my posts in this thread for your answers.
Thanks- sometimes I tend to tune out nestled conversations and totally missed that someone else brought this up.
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Buy the book: "Social Security Made Simple" by Mike Piper - $5 on Amazon for the Kindle version. Everyone on the BH forums agree that this is the best outline of the program.
In terms of the bend points, when I calculate my PIA amount a couple of years ago, here's how it worked at Full Retirement Age of 67:
PIA formula
Bend Point One: AIME below $856 = 90% x amount
Bend Point Two: AIME over $856 and below $5,157 = 32% x amount
Bend Point Three: AIME over $5,157 = 15% x amount
So if your Average Income Monthly Earning over the 35 years was $6000, your PIA would be:
$856 x .90 =$770.40
($5,517-$856) x .32 = $1491.52
($6,000-5,517) x .15 = $72.45
Total PIA: $2,334.37
So you can see getting to the second bend point is where most of the income is calculated.
Those were the values in 2016. The values for 2023 are $1,115 and $6,721.
https://www.ssa.gov/OACT/COLA/bendpoints.html
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@FIRE 20/20 - I explicitly noted that the values were several years old. The post was to illustrate how the bend points work.
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@FIRE 20/20 - I explicitly noted that the values were several years old. The post was to illustrate how the bend points work.
I'm sorry, my post wasn't intended as a correction but an update to provide the current values. You were definitely clear that they were a few years old, I was just trying to provide the new values and a reference for both when your values were correct and for anyone who wanted to find the updated values in the future. I can see that what I wrote could have been interpreted as a correction, but that wasn't my intent. I apologize that it came across that way.
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Buy the book: "Social Security Made Simple" by Mike Piper - $5 on Amazon for the Kindle version. Everyone on the BH forums agree that this is the best outline of the program.
In terms of the bend points, when I calculate my PIA amount a couple of years ago, here's how it worked at Full Retirement Age of 67:
PIA formula
Bend Point One: AIME below $856 = 90% x amount
Bend Point Two: AIME over $856 and below $5,157 = 32% x amount
Bend Point Three: AIME over $5,157 = 15% x amount
So if your Average Income Monthly Earning over the 35 years was $6000, your PIA would be:
$856 x .90 =$770.40
($5,517-$856) x .32 = $1491.52
($6,000-5,517) x .15 = $72.45
Total PIA: $2,334.37
So you can see getting to the second bend point is where most of the income is calculated.
This is great, thank you. I'll check out that book.
Thank you @FIRE 20/20 for the current figures
@brandon1827 I have calculated FIRE number without as well. But these SS threads have made me more curious about what else might be there later in life so I'm enjoying the idea that we will probably have some extra $ rolling in by the time we reach 60-70.
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I haven't checked my social security statement in ages - but this thread made me look and I noticed something new.
I have about 10 really low earning years when I was a teen and in college that now seem to be grouped into 2 years of full time minimum wage income - effectively taking me down from almost 30 years of work to 19 years. I swear this is new.
I remember when I looked several years ago that I had lots of 3-7k years from high school and undergrad. Now I have 1991-2000 and 2000-2005 and then annual wages from 2006 onwards.
I wonder if that is just how they list it or how they count it? And if it is how they count it, will just wash out or will it hurt me because now I'll have more zero years when I cut the cord?
This doesn't hurt you in any way and in fact could actually help you if you ended up having more than 35 years and didn't have to replace some of your earnings.
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@FIRE 20/20 - I explicitly noted that the values were several years old. The post was to illustrate how the bend points work.
I'm sorry, my post wasn't intended as a correction but an update to provide the current values. You were definitely clear that they were a few years old, I was just trying to provide the new values and a reference for both when your values were correct and for anyone who wanted to find the updated values in the future. I can see that what I wrote could have been interpreted as a correction, but that wasn't my intent. I apologize that it came across that way.
All good! ;)
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I haven't checked my social security statement in ages - but this thread made me look and I noticed something new.
I have about 10 really low earning years when I was a teen and in college that now seem to be grouped into 2 years of full time minimum wage income - effectively taking me down from almost 30 years of work to 19 years. I swear this is new.
I remember when I looked several years ago that I had lots of 3-7k years from high school and undergrad. Now I have 1991-2000 and 2000-2005 and then annual wages from 2006 onwards.
I wonder if that is just how they list it or how they count it? And if it is how they count it, will just wash out or will it hurt me because now I'll have more zero years when I cut the cord?
This doesn't hurt you in any way and in fact could actually help you if you ended up having more than 35 years and didn't have to replace some of your earnings.
I'm really hoping to bow out in the next year or so - hence my concern of 20 years of work instead of 29. Really hoping to not work another 15! I started drawing a paycheck before puberty, I'm ready to be done for a bit.
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I kind of wish they wouldn't send these statements out to people. I understand that SSA is working to be transparent, but there are unintended consequences.
In the case of my parents and some of their friends, what sounded like a lot of money for retirement 20-30 years ago turns out to barely feel like anything now. Unfortunately some people use "but I'll just take my social security" as an excuse to save less . . . or save nothing . . . and then they are surprised when they can't comfortably retire.
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I kind of wish they wouldn't send these statements out to people. I understand that SSA is working to be transparent, but there are unintended consequences.
In the case of my parents and some of their friends, what sounded like a lot of money for retirement 20-30 years ago turns out to barely feel like anything now. Unfortunately some people use "but I'll just take my social security" as an excuse to save less . . . or save nothing . . . and then they are surprised when they can't comfortably retire.
Yup. I have the 'rich parents, poor parents' example. My parents didn't factor SS in, optimized the payout, and use SS income as fun money; DW's parents claimed early and palpably wait for the SS check every month...
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I kind of wish they wouldn't send these statements out to people. I understand that SSA is working to be transparent, but there are unintended consequences.
In the case of my parents and some of their friends, what sounded like a lot of money for retirement 20-30 years ago turns out to barely feel like anything now. Unfortunately some people use "but I'll just take my social security" as an excuse to save less . . . or save nothing . . . and then they are surprised when they can't comfortably retire.
Yup. I have the 'rich parents, poor parents' example. My parents didn't factor SS in, optimized the payout, and use SS income as fun money; DW's parents claimed early and palpably wait for the SS check every month...
Did the "poor parents" save for retirement at all outside SS, or was it the taking it early that more substantially impacted their retirement?
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I kind of wish they wouldn't send these statements out to people. I understand that SSA is working to be transparent, but there are unintended consequences.
In the case of my parents and some of their friends, what sounded like a lot of money for retirement 20-30 years ago turns out to barely feel like anything now. Unfortunately some people use "but I'll just take my social security" as an excuse to save less . . . or save nothing . . . and then they are surprised when they can't comfortably retire.
But, the goal of the statements is to make sure people understand what they will get. Some people might interpret it as "a lot" of money, and some may think it's a drop in the bucket of their overall retirement plan. But, data is a valuable tool for everyone. Unfortunately, not everyone is financially responsible, regardless of how much access to information they have.
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The statement says that SS is only meant to replace approximately 40% of your pre-retirement income. I would hope that there aren't many people just not worrying about retirement at all and thinking SS is going to fully fund whatever plans they have after they're done working.
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^Look at the big brain on brandon reading all the words! Lol
I just look quickly at the numbers that follow $ signs (like most people.)
And many people must neglect to figure in the bite that taxes will take if they have other income while collecting Soc Sec.
Here's another 40%: 2 out of 5 retirees rely on social security for more than half of their income.
1 out of 8 rely on it for >90% of their income.
Although ~90% of people retiring in the next couple of decades will end up financially ahead and collect more money overall if they wait until age 70 to start drawing Soc Sec, only 6% will wait.
Based upon current trends, nearly 70% of people who do not have a disability will start drawing at age 65 or younger, with about half of those starting to collect at the earliest possible moment at 62.
It turns out that most people can't resist having what they perceive as an uncollected check waved in front of their face month after month, year after year.
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I kind of wish they wouldn't send these statements out to people. I understand that SSA is working to be transparent, but there are unintended consequences.
In the case of my parents and some of their friends, what sounded like a lot of money for retirement 20-30 years ago turns out to barely feel like anything now. Unfortunately some people use "but I'll just take my social security" as an excuse to save less . . . or save nothing . . . and then they are surprised when they can't comfortably retire.
Yup. I have the 'rich parents, poor parents' example. My parents didn't factor SS in, optimized the payout, and use SS income as fun money; DW's parents claimed early and palpably wait for the SS check every month...
Did the "poor parents" save for retirement at all outside SS, or was it the taking it early that more substantially impacted their retirement?
Not really something I have discussed with the in-laws. They have a lot tied up in their retirement home and they had a feast or famine income in heavy machine sales, which petered out on a long famine...
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Checked my estimated benefits and SS in the last week or so has updated them for the newest AWI. Just over a 5% increase. I'll take it.
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Checked my estimated benefits and SS in the last week or so has updated them for the newest AWI. Just over a 5% increase. I'll take it.
Thanks for this! I've been checking and checking since october and final thought I was going to have to wait until new statements in 2024... saw this and got all excited last night and went to check and site was down, lol!
forgot, and then my computer was left on this thread.....checked today and update my spreadsheets. With some satisfaction, I might add. :).
the upgrade definitely takes me a bit closer as my calculations were already factoring in the inflationary pressures on my budget - or most of it anyway. Having no pension, the SS is going to be important to me. Putting worries about its coming insolvency aside for the moment....
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Thanks for this! I've been checking and checking since october and final thought I was going to have to wait until new statements in 2024... saw this and got all excited last night and went to check and site was down, lol!
forgot, and then my computer was left on this thread.....checked today and update my spreadsheets. With some satisfaction, I might add. :).
the upgrade definitely takes me a bit closer as my calculations were already factoring in the inflationary pressures on my budget - or most of it anyway. Having no pension, the SS is going to be important to me. Putting worries about its coming insolvency aside for the moment....
No pension here either. And I just turned 49. SS starting to slowly seem more "real". My wages this year are higher than I expected, so Ill be checking back in in Feb to see what kind of bump that'll give me.
Looking at historical tables of AWI and CPI, it seems AWI has consistently beat CPI over the years. Our benefits earning a real return as it were.
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I retired in 2015 at age 55 with just 30 years of full time wages going into my benefits calculation. Because of that I knew my benefits would be average.
Fast forward, I recently found a 2016 statement which put my benefit at 66+10mo at $2269. I had read about the big COLA adjustment for this year so I decided to check on my current benefit level.
To my surprise, I'm now at $3075 !!! That's a 35% increase, WOW! I had no idea of the affect of COLA adjustments.
Anyone else checked their benefits lately?
Sent from my SM-A205U using Tapatalk
Are you not more shocked by the increase of the prices of everything?
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Thanks for this! I've been checking and checking since october and final thought I was going to have to wait until new statements in 2024... saw this and got all excited last night and went to check and site was down, lol!
forgot, and then my computer was left on this thread.....checked today and update my spreadsheets. With some satisfaction, I might add. :).
the upgrade definitely takes me a bit closer as my calculations were already factoring in the inflationary pressures on my budget - or most of it anyway. Having no pension, the SS is going to be important to me. Putting worries about its coming insolvency aside for the moment....
No pension here either. And I just turned 49. SS starting to slowly seem more "real". My wages this year are higher than I expected, so Ill be checking back in in Feb to see what kind of bump that'll give me.
Looking at historical tables of AWI and CPI, it seems AWI has consistently beat CPI over the years. Our benefits earning a real return as it were.
Yeah - back in my 30's didn't seem like social security was going to make a real difference to me, one way or another.....either gone, reduced benefits, or just not a lot of money generally......but now with my improved earnings the past 5 years, and projecting to wait until 70 to take benefits, it is really going to be an important part of my plan.
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Thanks, @SpareChange !
I've been using https://ssa.tools/calculator.html along with https://opensocialsecurity.com/ for SS modeling.
Thanks for sharing those tools. I had been manually calculating via Excel spreadsheet, but it was nice to see that the (former) tool confirmed my numbers.
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Thanks for this! I've been checking and checking since october and final thought I was going to have to wait until new statements in 2024... saw this and got all excited last night and went to check and site was down, lol!
forgot, and then my computer was left on this thread.....checked today and update my spreadsheets. With some satisfaction, I might add. :).
the upgrade definitely takes me a bit closer as my calculations were already factoring in the inflationary pressures on my budget - or most of it anyway. Having no pension, the SS is going to be important to me. Putting worries about its coming insolvency aside for the moment....
No pension here either. And I just turned 49. SS starting to slowly seem more "real". My wages this year are higher than I expected, so Ill be checking back in in Feb to see what kind of bump that'll give me.
Looking at historical tables of AWI and CPI, it seems AWI has consistently beat CPI over the years. Our benefits earning a real return as it were.
Right on time. My SS account and benefits estimate were updated today for last year's earnings.
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I had checked in late January, prior to the update with 2023 income, and then again yesterday.
2023 saw me making more money than I ever had in my life. The difference in my wait until 70 estimate? $6 more per month.
Yippy, Skippy, Hurrah.
Since I still had a couple years of under $1000/yr to knock off my 35 highest, I was kind of expecting it would be more.
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I had checked in late January, prior to the update with 2023 income, and then again yesterday.
2023 saw me making more money than I ever had in my life. The difference in my wait until 70 estimate? $6 more per month.
Yippy, Skippy, Hurrah.
Since I still had a couple years of under $1000/yr to knock off my 35 highest, I was kind of expecting it would be more.
Darn. Are you past the second bend point?
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I had checked in late January, prior to the update with 2023 income, and then again yesterday.
2023 saw me making more money than I ever had in my life. The difference in my wait until 70 estimate? $6 more per month.
Yippy, Skippy, Hurrah.
Since I still had a couple years of under $1000/yr to knock off my 35 highest, I was kind of expecting it would be more.
Darn. Are you past the second bend point?
I guess I must be. The last time I really looked into all the bend point math was a few years ago and I was still below the second bend, but it wasn't by much. If I really dug into it, mostly likely I'd find that I'm shortly past it now.
I'll be collecting my late spouse's under the widowed provision between 60-70, which gives mine time to grow enough to be a bump up. (It wouldn't be if I collected mine at 62, but will be at 70.)
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My age 70 amount increased by $260 over my spreadsheet value with the addition of 2023 earnings, and yes, I am long past the second bend point.
Note that that is the "full" projected amount, not discounted by 20-25% due to SS funding projections.
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My age 70 amount increased by $260 over my spreadsheet value with the addition of 2023 earnings, and yes, I am long past the second bend point.
Note that that is the "full" projected amount, not discounted by 20-25% due to SS funding projections.
Hmmm. Actually, I wonder if when I checked in January maybe the projections that I downloaded pre 2023 data load had assumed the same income for 2023 as 2022? That would make more sense for it to be only $6 difference.
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This thread got me thinking more about our SS. I realized, after reading a Boglehead thread, that my plans to always wait until age 70 to start SS make no sense. My best option financially is definitely to start at 62 as spouse can start then at half my SS.
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This thread got me thinking more about our SS. I realized, after reading a Boglehead thread, that my plans to always wait until age 70 to start SS make no sense. My best option financially is definitely to start at 62 as spouse can start then at half my SS.
Have you checked what opensocialsecurity.com suggests for your situation? Usually claiming at 62 isn't best, but it depends on the situation.
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This thread got me thinking more about our SS. I realized, after reading a Boglehead thread, that my plans to always wait until age 70 to start SS make no sense. My best option financially is definitely to start at 62 as spouse can start then at half my SS.
Have you checked what opensocialsecurity.com suggests for your situation? Usually claiming at 62 isn't best, but it depends on the situation.
Yes, it strongly confirms the math and recommends age 62. Age 67 would be 93% of max NPV and age 70 would be 90%. I also modeled it in Excel with my own discount rate assumptions and found similar. If I wait until 67 I don't catch up to the age 62 option until I am 85 years old or so and even at age 90 the figures are similar.
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6 or 7 extra years of at or near maximum pay level may also have made a big difference for you.
For myself, if I work much into 2025 it will knock the last of my sub-10K earning years off my 35 year average, bumping it up quite a bit.
Yes, it would have since 5 years going into the calculation are from my college years. But selling my business and retiring was more important and I have some income property.
For the younger folks on this site with plans on FIREing after 20 years, I'd bet a lot of them haven't considered that having 15 years of zero SS earnings will affect their benefits dramatically. That's if they even know about the 35 year calculation; I didn't until my accountant told me just before I sold my business.
I encourage everyone to go to ssa.gov and see where you stand.
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For those in high paying fields, it only takes about 17 years of maximum contribution to reach the second bend point. After that, additional years don't have as big of an effect.
And for some in public service, there will be no SS.
That would mean someone would need to work 34 years of a high paying field that pays 1/2 of the annual maximum contribution in order to get to the 2nd bend point. People who retire early in such scenario likely won't ever even make it to the second bend point.
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
IIRC there is some sort of inflation adjustment to prior years.
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
The bend points refer to the changes in otherwise linear relationship between monthly income and monthly insurance benefit as shown below:
(https://m.foolcdn.com/media/dubs/images/Social_Security_Bend_Points.width-880.png)
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The bend points refer to the changes in otherwise linear relationship between monthly income and monthly insurance benefit as shown below:
Yep, I understand that. And I'm pretty sure I made it past the second bend point, but based on the income numbers and the way people are doing the math, apparently I shouldn't have? I'm sure SS got it right, and I'm fairly confident I got it right, so I figure the other people must be doing something wrong. But I'm subject to occasional hubris so I like to look out for that.
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
The bend points refer to the changes in otherwise linear relationship between monthly income and monthly insurance benefit as shown below:
(https://m.foolcdn.com/media/dubs/images/Social_Security_Bend_Points.width-880.png)
If that chart references earned amount at "full retirement age" then I'm actually not yet past the second bend point though I might be very close to it one side or the other when I FIRE in a couple years.
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
Years worked a long time ago are far more valuable in the calculation, but the bend points have increased over time:
https://www.ssa.gov/oact/cola/bendpoints.html
Are you sure that you were nowhere near the max? In 1993, the max was $57,600 for example:
https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
Years worked a long time ago are far more valuable in the calculation, but the bend points have increased over time:
https://www.ssa.gov/oact/cola/bendpoints.html
Are you sure that you were nowhere near the max? In 1993, the max was $57,600 for example:
https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html
So the fact that the older years are inflation adjusted probably accounts for what I'm talking about.
In 1993 I graduated from college in May and started a relatively modest paying job in August or so. I definitely wasn't near the $57,600 cap. I did get closer in my later career after 17 years of experience plus an MBA.
Thanks for the reply and the explanation. You're right that mentally I know the cap is $100K plus now and I was only making $XXK back in the early 1990s, but inflation obviously makes a big difference over a quarter century.
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I must be missing something about the bend points, or maybe others are.
My working career was only 23 calendar years long, and most of those were not anywhere near the SS max. Yet I'm fairly certain that at one point I confirmed that I was just past the second bend point. Every year the last few years of my retirement, I was checking my SS earnings record and my SS benefit, and it really was barely going up, which seems to match being past the second bend point. But I seem to have gotten there faster than the previous posts suggest.
I'm wondering if there's some sort of inflation adjustment or something somewhere that helps one get there faster than one might expect via a static analysis.
:shrug:
Years worked a long time ago are far more valuable in the calculation, but the bend points have increased over time:
https://www.ssa.gov/oact/cola/bendpoints.html
Are you sure that you were nowhere near the max? In 1993, the max was $57,600 for example:
https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html
So the fact that the older years are inflation adjusted probably accounts for what I'm talking about.
In 1993 I graduated from college in May and started a relatively modest paying job in August or so. I definitely wasn't near the $57,600 cap. I did get closer in my later career after 17 years of experience plus an MBA.
Thanks for the reply and the explanation. You're right that mentally I know the cap is $100K plus now and I was only making $XXK back in the early 1990s, but inflation obviously makes a big difference over a quarter century.
Are you saying that inflation alone could take someone who was nowhere near the second bend point to actually moving past it with only 23ish years of work? This seems hard for me to believe.
I've been working for 15 years (with a couple years off) - my current salary is about 1/2 of the annual max income base for SS tax. I have been closer in the past, but not frequently.
Getting to the first bend point is most important, being past the first bend point myself and well below the second bend point, earning roughly $80k per year only increases my SS by roughly $60 per month.
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My age 70 amount increased by $260 over my spreadsheet value with the addition of 2023 earnings, and yes, I am long past the second bend point.
Note that that is the "full" projected amount, not discounted by 20-25% due to SS funding projections.
Hmmm. Actually, I wonder if when I checked in January maybe the projections that I downloaded pre 2023 data load had assumed the same income for 2023 as 2022? That would make more sense for it to be only $6 difference.
I'm past the second bend point, and replacing a very low earning year with 2023 income.
I'm up 37/month at 62, 67 at 70. Maybe check again, make sure the statment lists your 2023 wages on it.
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Are you saying that inflation alone could take someone who was nowhere near the second bend point to actually moving past it with only 23ish years of work? This seems hard for me to believe.
I thought that's what *you* were suggesting.
Anyway, I did go grab my SS earnings history from the SS website and shoved it into ssa.tools/calculator. It did confirm, at least, that I am, in fact, just a bit past the second bend point based on my earnings record.
Although I started my career in 1993 and retired in 2016, I did work in high school and college (typical summer/part time jobs), so my earnings record goes back to 1985. I also have a Schedule C side gig, so I have some SS-taxed income from 2021 onward. All told, it's 39 work years (of which they obviously take only the top 35).
The age 70 benefit amount calculated by ssa.tools is within 32 basis points of the number that the SS website provides, so I think that ssa.tools is doing things correctly.
FWIW, the wage/inflation multipliers at ssa.tools go up to 3.79 for 1985. They're above 2 starting in 1999 and earlier.
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Are you saying that inflation alone could take someone who was nowhere near the second bend point to actually moving past it with only 23ish years of work? This seems hard for me to believe.
I thought that's what *you* were suggesting.
Anyway, I did go grab my SS earnings history from the SS website and shoved it into ssa.tools/calculator. It did confirm, at least, that I am, in fact, just a bit past the second bend point based on my earnings record.
Although I started my career in 1993 and retired in 2016, I did work in high school and college (typical summer/part time jobs), so my earnings record goes back to 1985. I also have a Schedule C side gig, so I have some SS-taxed income from 2021 onward. All told, it's 39 work years (of which they obviously take only the top 35).
The age 70 benefit amount calculated by ssa.tools is within 32 basis points of the number that the SS website provides, so I think that ssa.tools is doing things correctly.
FWIW, the wage/inflation multipliers at ssa.tools go up to 3.79 for 1985. They're above 2 starting in 1999 and earlier.
What I was suggesting is that you probably didn't realize that you were likely close to the annual SS max when you were working.
It will be interesting to see what the multipliers are for the 2010s in 2047 when I am first eligible for social security. :D
Are your 2021-2024 years replacing your years of high school and college jobs or are the multipliers so high that those years are still higher than your side gig years?
It seems that I would need to work until age 55-57 to hit the second bend point, but that's based on this year's bend points number. I don't really know how to project what inflation could do to my own numbers that it doesn't also do to the increase in bend point levels.
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What I was suggesting is that you probably didn't realize that you were likely close to the annual SS max when you were working.
I wasn't paying that much attention when I was working. Now, I can look back at my earnings record and compare it to the SS MTA in retrospect. I think the late 1990s were good for me because my earnings were growing about 10% annually as I was developing my career, and the SS MTA probably wasn't going up as much, so I was gaining ground on a relative basis.
I don't want to disclose my income history, but basically I got a CS degree in 1993 and worked as a pretty well paid engineer and engineering manager for a couple of well known high tech companies.
Are your 2021-2024 years replacing your years of high school and college jobs or are the multipliers so high that those years are still higher than your side gig years?
My side gig years (2021+) look like they will replace a $0 year of 2017 first, then yes, they'll start wiping out the low-income (even inflation adjusted) high school and college years. But the side gig itself isn't all that lucrative, so my SS benefit probably won't change by anything worth mentioning.
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Where do you find your AIME number on the ssa website? Or is that something we have to calculate ourselves based on our earnings history?
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Where do you find your AIME number on the ssa website? Or is that something we have to calculate ourselves based on our earnings history?
You can get you earnings history, then dead over to https://ssa.tools/ (https://ssa.tools/) for better explanations and what-if tinkering.
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This is probably a dumb question, but should you work to the second bend point?
My spouse works a job that doesn't pay into social security so I've always felt that my social security would be more important than in a dual SS earning household.
But working another decade at my current salary still doesn't get me that close to the second point (according to the SSA Tools site).
On the other hand, my spouse doesn't plan to retire early, and does have a 401a, and as a couple we are already have a 'stache that is more than big enough to coastFI to age 59.5.
In my early 40s, I still find the whole Social Security thing to be opaque and hard to plan around. But I also feel like we should be incorporating it into our plans.
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This is probably a dumb question, but should you work to the second bend point?
I think this is a more specific version of the question: "When is working more no longer worth it?"
The answer for me was a combination of how much I liked/disliked my job (it was "meh" at the end), how much money I had (more than enough), how old I was (46), what my backup plans were if things went sideways (a lot), and what else I wanted to do (not much, but staying at work wasn't one of them).
I did choose to arrange the timing of my exit so that I could exercise a batch of stock options, so even though I was "meh" about the job and I thought I had enough money, the additional dollars per additional time calculation felt worth it.
Social Security is just another thing where the longer you work, the more resources pile up. Between the first and second bend point, they pile up at a particular rate. Depending on your own personal calculus, that rate may be worth it or it may not.
What I would do (and did the last few years I worked) was check the SS website every year and see how much my ultimate SS benefit had gone up for the work I had put in and the income I had earned. It wasn't much, and it didn't tip the scale to "keep working" for me personally.
Before the second bend point, your benefit does go up about twice as fast as after the second bend point - I think it's 32% to 15% or something like that. And it's not clear from your post if your spouse would be eligible to collect spousal SS benefits or not. If so, those two things make it accrue at a higher rate than it did for me. But at some point (especially if you know you have "enough" dollars already), they could offer you $1000 an hour and you'd turn it down because time becomes more valuable than money.
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Right on time. My SS account and benefits estimate were updated today for last year's earnings.
Today's MPP: We had no 2023 earned income, so our numbers haven't changed, waaaah.
Good point about early years earnings, @secondcor521. Since I FIRE'd early-ish, I still have a couple of really low years of HS and collage part time jobs in my history. For a fleeting moment, I considered OMY or even TMY to knock them off. Because they were my very first earning years, the inflation adjustments were huge. It was absolutely not worth what I'd have to earn in today's (or 2012's, when I FIRE'd) dollars to replace them.
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Right on time. My SS account and benefits estimate were updated today for last year's earnings.
Today's MPP: We had no 2023 earned income, so our numbers haven't changed, waaaah.
Good point about early years earnings, @secondcor521. Since I FIRE'd early-ish, I still have a couple of really low years of HS and collage part time jobs in my history. For a fleeting moment, I considered OMY or even TMY to knock them off. Because they were my very first earning years, the inflation adjustments were huge. It was absolutely not worth what I'd have to earn in today's (or 2012's, when I FIRE'd) dollars to replace them.
I'm guessing your portfolio went up in 2023 more than enough to compensate.
After going through the ssa.tools AIME exercise, I am a little bit pleased that, once my 2023 side gig income posts, I will have 35 years of SS earnings. It doesn't matter a whit in the end, but I feel like a bit less of a slacker.
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Right on time. My SS account and benefits estimate were updated today for last year's earnings.
Today's MPP: We had no 2023 earned income, so our numbers haven't changed, waaaah.
Good point about early years earnings, @secondcor521. Since I FIRE'd early-ish, I still have a couple of really low years of HS and collage part time jobs in my history. For a fleeting moment, I considered OMY or even TMY to knock them off. Because they were my very first earning years, the inflation adjustments were huge. It was absolutely not worth what I'd have to earn in today's (or 2012's, when I FIRE'd) dollars to replace them.
Your SS numbers should have gone up in 2023 because of inflation - your prior years of earnings are now worth more.
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Right on time. My SS account and benefits estimate were updated today for last year's earnings.
Today's MPP: We had no 2023 earned income, so our numbers haven't changed, waaaah.
Good point about early years earnings, @secondcor521. Since I FIRE'd early-ish, I still have a couple of really low years of HS and collage part time jobs in my history. For a fleeting moment, I considered OMY or even TMY to knock them off. Because they were my very first earning years, the inflation adjustments were huge. It was absolutely not worth what I'd have to earn in today's (or 2012's, when I FIRE'd) dollars to replace them.
Your SS numbers should have gone up in 2023 because of inflation - your prior years of earnings are now worth more.
While true, the SS only makes the inflation and wage adjustments once a year. If a person randomly checks SS (like me and maybe Dicey) every few months, they might check twice between the inflation/wage adjustments and conclude that their benefit hasn't gone up.
I *think* my benefits go up about twice a year, once in the spring about March and once in the fall. But I honestly don't pay that much attention other than that.
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Right on time. My SS account and benefits estimate were updated today for last year's earnings.
Today's MPP: We had no 2023 earned income, so our numbers haven't changed, waaaah.
Good point about early years earnings, @secondcor521. Since I FIRE'd early-ish, I still have a couple of really low years of HS and collage part time jobs in my history. For a fleeting moment, I considered OMY or even TMY to knock them off. Because they were my very first earning years, the inflation adjustments were huge. It was absolutely not worth what I'd have to earn in today's (or 2012's, when I FIRE'd) dollars to replace them.
Your SS numbers should have gone up in 2023 because of inflation - your prior years of earnings are now worth more.
While true, the SS only makes the inflation and wage adjustments once a year. If a person randomly checks SS (like me and maybe Dicey) every few months, they might check twice between the inflation/wage adjustments and conclude that their benefit hasn't gone up.
I *think* my benefits go up about twice a year, once in the spring about March and once in the fall. But I honestly don't pay that much attention other than that.
Ah- I only check annually when the new statement gets uploaded.
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This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
There are a couple of things working another 7 years does besides the minor increase in SS you lament. You have 7 additional years of savings and you have 7 additional years of compound interest on your nest egg. With just a little stock market luck, that will more than double your nest egg.
I won’t need to work for 7 more years to get to 35, I’ll have enough. Why would I work more to become even richer.
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This is where I’m at. I will have about 21 years at the maximum amount and am past the 2nd bend point. The marginal gain of working another 7 years (to get to 35) is not really enough to move the needle so why would I.
There are a couple of things working another 7 years does besides the minor increase in SS you lament. You have 7 additional years of savings and you have 7 additional years of compound interest on your nest egg. With just a little stock market luck, that will more than double your nest egg.
I won’t need to work for 7 more years to get to 35, I’ll have enough. Why would I work more to become even richer.
Ah, it's always nice to be reminded why we're here. Go, @Formerly known as something!
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I was reading various sites during a slow workday, and finally decided to check out opensocialsecurity.com
Their recommendation was exactly the same as what I had worked out was the best option. Go me. :)