Anyone else shocked by the increase in their Social Security benefits?

[mboley]

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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[ixtap]

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.

[HipGnosis]

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.

[Sandi_k]

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

[Turtle]

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.

[mboley]

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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[ixtap]

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.

[Fomerly known as something]

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.

[ixtap]

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).

[Mr. Green]

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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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.

[Loren Ver]

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. 

[GilesMM]

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.

[dreaming]

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.

[SpareChange]

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.

[Turtle]

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.

[Weisass]

Thanks for suggesting the tools. I had forgotten that was something I could play with. very enlightening.

[SpareChange]

FYI...looks like SS updated estimated earnings to include 2022 income in the last few days.

[oneday]

Thanks, @SpareChange !

I've been using https://ssa.tools/calculator.html along with https://opensocialsecurity.com/ for SS modeling.

[SpareChange]

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.

[dreaming]

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.

[FIRE 20/20]

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. 

[Tempname23]

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.
   

[MustacheAndaHalf]

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

[JupiterGreen]

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.         

[secondcor521]

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

[moof]

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.

[FIRE 20/20]

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. 

[JupiterGreen]

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? 

[FIRE 20/20]

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. 

[secondcor521]

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.

[JupiterGreen]

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

[EscapeVelocity2020]

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.

[secondcor521]

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.

[LD_TAndK]

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!

[MustacheAndaHalf]

...

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).

[Tempname23]

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.

[Tempname23]

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

[YttriumNitrate]

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.

[StarBright]

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?

[JupiterGreen]

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.

[brandon1827]

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

[secondcor521]

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.

[Sandi_k]

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.

[StarBright]

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.

[FIRE 20/20]

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

[Sandi_k]

@FIRE 20/20 - I explicitly noted that the values were several years old. The post was to illustrate how the bend points work.

[FIRE 20/20]

@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. 

[JupiterGreen]

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.

[Gronnie]

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.

[Sandi_k]

@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! ;)